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IHT: Residence nil-rate-band
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Sterlingtimes
Posts: 2,522 Forumite


in Cutting tax
Please help me understand the following:
Husband and Wife own a house as joint tenants valued at £600k. The whole estate is valued at £1,200k.
Husband and Wife each have a residence nil-rate band of £175k.
Husband dies. Wife owns the house outright and "inherits" Husband's residence nil-rate band of £175k.
Wife downsizes and buys a retirement house for £250k.
Wife dies and Son inherits the £250k house and the rest of the estate.
What is the residence nil-rate band from which Son benefits?
Has Wife compromised Son by downsizing?
Ignore inflation.
Husband and Wife own a house as joint tenants valued at £600k. The whole estate is valued at £1,200k.
Husband and Wife each have a residence nil-rate band of £175k.
Husband dies. Wife owns the house outright and "inherits" Husband's residence nil-rate band of £175k.
Wife downsizes and buys a retirement house for £250k.
Wife dies and Son inherits the £250k house and the rest of the estate.
What is the residence nil-rate band from which Son benefits?
Has Wife compromised Son by downsizing?
Ignore inflation.
I have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".
0
Comments
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The downsizing rule applies so her executor would still be able to claim both her RNRB and the full transferable RNRB from her spouse. As she has ample assets to see her through her old age she may also like to thing about making a one off gift to her son to get her total assets below £1M. She would have to survive 7 years for it to fall out of her estate, but there is no negative impact on IHT if that doesn’t happen.
https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold
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Keep_pedalling said:The downsizing rule applies so her executor would still be able to claim both her RNRB and the full transferable RNRB from her spouse. As she has ample assets to see her through her old age she may also like to thing about making a one off gift to her son to get her total assets below £1M. She would have to survive 7 years for it to fall out of her estate, but there is no negative impact on IHT if that doesn’t happen.
https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-thresholdI have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".0
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