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Inheritance tax, abode.

"If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000."

What does the above mean? If a persons home is included in the estate and then sold and the money goes to both children, is that still classed as being left to the children? With inflation and increasing house values, there must be many more estates subject to inheritance tax.



Comments

  • theoretica
    theoretica Posts: 12,690 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Yes - the extra threshold applies if the property is sold, including if it is sold before death for downsizing or moving into care. 
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • Smudgeismydog
    Smudgeismydog Posts: 311 Ambassador
    100 Posts Second Anniversary Photogenic Mortgage-free Glee!
    It refers to the Residence Nil Rate Band, which is up to £175,00 each. When added to the Nil Rate Band of £325,000, you get the £500,000.

    There are some caveats though
    I’m a Forum Ambassador and I support the Forum Team on the Pension, Debt Free Wanabee, and Over 50 Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the Report button, or by e-mailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • squirrelpie
    squirrelpie Posts: 1,353 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    edited 1 June 2023 at 5:53PM
    As a childless couple, the Residence Nil Rate Band really annoys us.
  • DIYPhil
    DIYPhil Posts: 28 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Further, if the deceased was predeceased by a spouse, the executors can claim transfers of the spouse’s nil rate band (£325,000) and also their residence nil rate band (£175,000). So, the total threshold for both parents where they transfer their home to direct descendants is £1 million.

    I recently submitted the IHT forms for my late dad, who passed away earlier this year, mum passed away 7 years ago. My dad’s house is worth around £650,000, total estate around £750,000, being left to my sister and me. I heard back from HMRC a couple of weeks ago - no IHT to pay. 
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