Capital gains tax on a GROB (Gift with a Reservation Of Benefit)

Keep_pedalling

bazray said:

Keep_pedalling said:

bazray said:

Keep_pedalling said:

The main tax issue is that will not be able to claim the residential NRB for the house as the transfer occurred well before the introduction of that relief even though her home still forms part of her estate for IHT purposes. 

Oh, I wasn't aware of that. My father died back in 1996 and the family house was sold and mum moved to the house I'm in now, can any of the nill rate band from him be used? thanks.

Yes, any of his unused standard NRB can be used, so if he left everything to your mother and made no non exempt gifts within 7 years of his death then it will be the full £325k. 

What is the total value of her estate for IHT purposes?

It's a bit more complicated as mum and dad stayed married but fell out. When dad died he left the house at the time to the children not to mum. We later sold that house and gave mum an equal share. But as he din't leave it to her then I presume she can't use any of his £325k. To clarify things a bit when the house was sold the second home as in the original post was actually my mothers only home. Around 4 years later she looked after her mum and That house was left to mum in the will. Then around 6 years later mum gifted it to me. It's a bit complicated as you can see. The current estate is valued around £483k I believe. Around 40% of dads nil rate band was left over from 1996 but I dont think its transferable as he didn't leave it to mum

You are not kidding that it is complicated. I don’t suppose the amount that was passed to your mother was done via a deed of variation by any chance? If it was it effectively changes his will and the amount passed to you mother would be covered by spousal exemption so not use his NRB.

Back in 96 the NRB was much lower (£154k before 6th April, £200k for deaths later in the year) what was the value of his estate? Any NRB not used at the time can be used now (as a % of unused NRB) regardless of who he left it too. 

Keep_pedalling

bazray said:

Keep_pedalling said:

Another thought, as the house is also the OPs home is the whole house GROB or just half of it? If you gift half of your home to a person who lives with you and continue to share household expenses then it is a PET rather than a GROB so I would have thought that would also apply to half of this gift.

Yes the whole house is a grob, she planned to live in the other house on her own so the main house was gifted to me. As I said above she did live in the other house for a while so at one point it was her main home, and that home is left to the grandchildren but whether that still counts towards the nil rate band is something I don't know.

No it only covers the primary residence, and presumably that house has been occupied by other people all this time, 

bazray

Keep_pedalling said:

bazray said:

Keep_pedalling said:

bazray said:

Keep_pedalling said:

The main tax issue is that will not be able to claim the residential NRB for the house as the transfer occurred well before the introduction of that relief even though her home still forms part of her estate for IHT purposes. 

Oh, I wasn't aware of that. My father died back in 1996 and the family house was sold and mum moved to the house I'm in now, can any of the nill rate band from him be used? thanks.

Yes, any of his unused standard NRB can be used, so if he left everything to your mother and made no non exempt gifts within 7 years of his death then it will be the full £325k. 

What is the total value of her estate for IHT purposes?

It's a bit more complicated as mum and dad stayed married but fell out. When dad died he left the house at the time to the children not to mum. We later sold that house and gave mum an equal share. But as he din't leave it to her then I presume she can't use any of his £325k. To clarify things a bit when the house was sold the second home as in the original post was actually my mothers only home. Around 4 years later she looked after her mum and That house was left to mum in the will. Then around 6 years later mum gifted it to me. It's a bit complicated as you can see. The current estate is valued around £483k I believe. Around 40% of dads nil rate band was left over from 1996 but I dont think its transferable as he didn't leave it to mum

You are not kidding that it is complicated. I don’t suppose the amount that was passed to your mother was done via a deed of variation by any chance? If it was it effectively changes his will and the amount passed to you mother would be covered by spousal exemption so not use his NRB.

Back in 96 the NRB was much lower (£154k before 6th April, £200k for deaths later in the year) what was the value of his estate? Any NRB not used at the time can be used now (as a % of unused NRB) regardless of who he left it too. 

Keep_pedalling said:

bazray said:

Keep_pedalling said:

Another thought, as the house is also the OPs home is the whole house GROB or just half of it? If you gift half of your home to a person who lives with you and continue to share household expenses then it is a PET rather than a GROB so I would have thought that would also apply to half of this gift.

Yes the whole house is a grob, she planned to live in the other house on her own so the main house was gifted to me. As I said above she did live in the other house for a while so at one point it was her main home, and that home is left to the grandchildren but whether that still counts towards the nil rate band is something I don't know.

No it only covers the primary residence, and presumably that house has been occupied by other people all this time, 

The house was never occupied by anyone else, mum purchased it when they were falling out, then when her mum became ill she looked after her and used it kind of like a holiday home. Then she wanted to retire there a few years later but due to ill health she had to come back and I was mums main carer. She was hoping to get well enough to go back and didn't want to sell it.

bazray

Keep_pedalling said:

bazray said:

Keep_pedalling said:

bazray said:

Keep_pedalling said:

The main tax issue is that will not be able to claim the residential NRB for the house as the transfer occurred well before the introduction of that relief even though her home still forms part of her estate for IHT purposes. 

Oh, I wasn't aware of that. My father died back in 1996 and the family house was sold and mum moved to the house I'm in now, can any of the nill rate band from him be used? thanks.

Yes, any of his unused standard NRB can be used, so if he left everything to your mother and made no non exempt gifts within 7 years of his death then it will be the full £325k. 

What is the total value of her estate for IHT purposes?

It's a bit more complicated as mum and dad stayed married but fell out. When dad died he left the house at the time to the children not to mum. We later sold that house and gave mum an equal share. But as he din't leave it to her then I presume she can't use any of his £325k. To clarify things a bit when the house was sold the second home as in the original post was actually my mothers only home. Around 4 years later she looked after her mum and That house was left to mum in the will. Then around 6 years later mum gifted it to me. It's a bit complicated as you can see. The current estate is valued around £483k I believe. Around 40% of dads nil rate band was left over from 1996 but I dont think its transferable as he didn't leave it to mum

You are not kidding that it is complicated. I don’t suppose the amount that was passed to your mother was done via a deed of variation by any chance? If it was it effectively changes his will and the amount passed to you mother would be covered by spousal exemption so not use his NRB.

Back in 96 the NRB was much lower (£154k before 6th April, £200k for deaths later in the year) what was the value of his estate? Any NRB not used at the time can be used now (as a % of unused NRB) regardless of who he left it too. 

Dad died on news years day 1996 his estate was worth £92k and yes the threshold was £154k . I don't know about a deed of variation but I have seen paperwork about something saying class F which I think is about holding an interest in a property. The solictior doesn't think that any of dads exemptions can be used but he thought the residence nil band rate would be okay. The trouble with solicitors is they don't know much about tax rules. Thanks for your input.