IHT - Property

chunkylover53

Hi

My mother has Dementia but now has undiagnosed (yet) medical condition. She’s currently in hospital where it has on more than one occasion been suggested we should be looking at end of life care but whether that’s 1 month or 1 year, no one knows. 

She has £40k cash and a £525k house.  She was divorced 40 years ago and my father is still alive but they have had nothing to do with each other since the divorce. 

I’m trying to understand if selling her house now would affect IHT. Ie I’m sure I’ve read inheriting a property gives a £500k allowance, but if I sold it to cover future (expensive) care and she were to die next week, then does this mean the cash from the sale is then all subject to the £325 allowance?

Or have I got the wrong end of the stick altogether?

thanks

RAS

Makes no difference to IHT liability if the house is sold now or after her death. The issue is that if the attorney (assume someone has registered LPA?) tries to sell it now and she dies during the process, then the sale can't be completed until the executors have probate.

poppystar

You would be able to apply a downsizing addition to the allowance even if the property has been sold 

https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold

Keep_pedalling

This is covered by the downsizing rule, so if you managed to sell the house before she dies the RNRB can still be claimed. 

You main problem is, as RAS points out, her dying in the middle of the sales process, 

chunkylover53

thanks all.

I have LPA and am executor of the will.  So I guess if she dies mid process, it just puts a bit of a hold on finalising any sale until I get probate (which I'm told is about 12 weeks?).  However, largely at that point there would be no rush to sell the property as we have enough to maintain it - it would just be an inconvenience to any buyer.

Sorry to be so frank about everything, I'm trying to leave emotions out of this stuff and get a clear idea.

RAS

No need to apologise. 

Currently with probate in England and Wales, you can't even query why it's not issued until 16 weeks. It helps if you use the on-line process, and some simple cases are issued in a few weeks. Paper cases with queries can take a long time and they seem to prioritise new accounts over anything that's been in the system over 6 months.