Downsizing relief after gift of property to children instead of sale

AROON1

Hi there, would anyone know the answer to the following?  have found multiple examples of the first scenario but nothing concrete for 2) and 3). I believe no IHT to pay but wanted to be sure.


Elderly widow has £400k house and 2 x NRB + 2 x RNRB (so £1m in total).

1) she sells house for £400k in 2022 and passes on £1m cash to children in 2024 on her death. There should be no IHT to pay as covered by allowances including downsizing relief.

2) she gifts £400k house to children in 2022 (and rents a new property) and passes on £600k cash to them in 2024 on her death.  Are the failed PET of the £400k house and the £600k cash covered by the NRB and downsizing relief?

3) she gifts £400k house to children in 2022 (and rents a new property) and passes on £1m cash to them in 2030 on her death.  Is the £1m cash covered by the NRB and downsizing relief? (the £400k gift of house dropped out of estate as more than seven years).

thank you

Jeremy535897

I find this guide quite straightforward:
https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold
But come 30 October and the Budget, some commentators think that inheritance tax, and the RNRB in particular, may be targeted.

SiliconChip

Why would she consider options 2 and 3 at all, giving up the security of an owned property for the insecurity of renting at an advanced age makes little sense for her. This smacks of beneficiaries trying to get as much from the inheritance as they can without giving any though to the needs of the elderly person.

AROON1

@SiliconChip - it was more a theoretical question so I could understand how the downsizing addition works for gifted homes, as opposed to homes that are sold and the proceeds gifted.

sheramber

Similar question 

https://forums.moneysavingexpert.com/discussion/6553322/mother-gifts-family-home-in-return-for-having-rent-paid-on-different-apartment#latest