Does sale of the family home lose RNRB?

StevieD54

Having asked previously about property bequeathement etc, I have a related query.

Mum was widowed in January and has now gone into sheltered housing (not a care home), where 5 other elderly people live.  So the family home (a bungalow) is now standing empty. My sister & I have organised ‘unoccupied’ house insurance for now, but my question is:

If the property is sold now (i.e. before she dies), does my Mum lose her RNRB IHT allowance, as the property will have been ‘cashed in’?  We don’t want the house to stand empty for what might be years, but on the other hand, Mum doesn’t want to lose her RNRB by selling now.

I quote from the government site…………

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When someone sells or gives away (disposes of) a former home so that there’s no longer any home in their estate when they die, the RNRB for the estate will be equal to the downsizing addition for the former home.

If someone downsized but had never lived in the less valuable property, that property is not a home for additional threshold purpose. This means that the position is the same as if the former home had been sold or given away.

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So this sounds as if the RNRB can still be used even if the bungalow is sold before she dies. Am I correct in this assumption?

As ever, any advice much appreciated.

HappyHarry

Yes - if your mothers property is sold during her lifetime the executors can still claim the RNRB.

There might also be a second RNRB that can be claimed if she was recently widowed from your father and the property was held in joint names at that time.

RAS

The RNRB rules were written with this situation in mind. The whole idea is that the property can be sold to fund appropriate support and the estate doesn't lose the residential allowance.

Keep_pedalling

Her estate won’t lose the RNRB if that is required, best to get the house sold rather than leave it empty.

Did she inherit everything from her husbands estate? If she did it won’t be required unless her estate exceeds £650k.

StevieD54

Thanks all.  To answer some of your queries ……

Dad died in January this year and left Mum the bungalow (ownership was in his sole name, it was not jointly owned).  She didn’t inherit everything in his estate, only the property and his Premium Bonds (the max £50k). So if we sold the property tomorrow, could I claim ‘double’ RNRB when Mum dies, or just one lot of RNRB?

HappyHarry

StevieD54 said:

Thanks all.  To answer some of your queries ……

Dad died in January this year and left Mum the bungalow (ownership was in his sole name, it was not jointly owned).  She didn’t inherit everything in his estate, only the property and his Premium Bonds (the max £50k). So if we sold the property tomorrow, could I claim ‘double’ RNRB when Mum dies, or just one lot of RNRB?

Yes. Your father’s estate was able to claim the RNRB so is still able to be claimed now as his estate benefitted from spousal exemption. Your mothers estate qualifies for the RNRB as she now owns the property.

Bear in mind that there will only be two full RNRBs available if the property value is at least £350,000 and this RNRB will suffer from tapering if the total estate is in excess of £2m.

StevieD54

Thanks Harry. I stated the bungalow value as £220k for Probate. So that will be the max allowance for RNRB when Mum passes, yes?

HappyHarry

StevieD54 said:

Thanks Harry. I stated the bungalow value as £220k for Probate. So that will be the max allowance for RNRB when Mum passes, yes?

You should be able to claim a total of £220k in RNRBs from your mother and from your father.

Keep_pedalling

HappyHarry said:

StevieD54 said:

Thanks Harry. I stated the bungalow value as £220k for Probate. So that will be the max allowance for RNRB when Mum passes, yes?

You should be able to claim a total of £220k in RNRBs from your mother and from your father.

Although unless she also has a very high level of savings neither RNRB will be needed. If you can get away with just using the NRB and transferable NRB the executor will not need to complete an IHT return, using either RNRB will require the return even if no IHT is due.