We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Does renting out the family home affect eligibility for RNRB?

My parents are both in declining health and my father in particular has quite bad demetia. As such he will certainly be going into a care home soon, and with limited mobility and a large house, my Mum would like to go to a retirement home at that point as well. They are well off and can fund all this privately from investments and a generous final salary pension, so their house will not need to be sold to fund their care.

That would leave the house empty though, potentially for some years. Neither me or my brother are in a position to move in to the property, so we aren't quite sure what to do with it. We could sell it and invest the money, but it seems unlikely that investment gains would make up for the loss of the £350k residence nill rate band once inheritance tax inevitably comes along.

The other alternative would be to rent it out until they both pass away, which would provide income as well. But would having someone else living in the house while both the owners are in care homes affect the eligibility for RNRB? This is the only property they own and they've been there for 40 odd years with the mortgage long paid off.

Comments

  • Cairnpapple
    Cairnpapple Posts: 327 Forumite
    100 Posts First Anniversary Name Dropper
    I believe that if the house is sold for them both to go into care homes,  you would still be able to claim the RNRB.

    https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold#selling-or-giving-away-a-home
  • Keep_pedalling
    Keep_pedalling Posts: 21,340 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    The downsizing rules mean that RNRB would not be lost. That also applies if they sold the house which, unless you are experienced landlords, is almost certainly the better option.

    Do you have power of attorney for your father?
  • mta999
    mta999 Posts: 176 Forumite
    100 Posts Name Dropper
    If I were you I would sell it - you will still be okay for the ENRB

    You may think that you will make more money by keeping it and letting it out then by say putting the proceeds of sale into a savings account or whatever, but in fact in this climate I doubt there would be much difference and certainly there will be a lot lot less hassle with the latter
  • Sulaco86
    Sulaco86 Posts: 26 Forumite
    Part of the Furniture 10 Posts Photogenic Combo Breaker
    Thanks all, the only objective in renting was the assumption that selling the property would lose the RNRB. If that isn't the case we'd much rather sell it and invest the proceeds. Yes, POE has been sorted, as have wills with a suitable trust structure. 
  • poppystar
    poppystar Posts: 1,693 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Also if rented out for any length of time you might well have a chunk of CGT on a later sale, which added to the hassle of being a landlord and having to keep the house in good condition (before even thinking about the possibility of bad tenants)  might leave you worse off financially and mentally.
  • RAS
    RAS Posts: 35,976 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Sulaco86 said:
    wills with a suitable trust structure. 
    If you read this forum, you'll understand why there's a certain amount of unease about wills and trusts.

    Immediate Post Death Interest trusts are often valuable in blended families and useful for other families. 

    There's a lot of other trusts, often by will writers but not exclusively, that cause all sorts of problems, including tax liabilities and HMRC reporting requirements which can take a lot of money to unwind.

    Basically, is the trust set up within their wills?

    P.S the other advantage of selling is that any gain in value whilst renting would be liable to a CGT liability.
    If you've have not made a mistake, you've made nothing
  • Sulaco86
    Sulaco86 Posts: 26 Forumite
    Part of the Furniture 10 Posts Photogenic Combo Breaker
    Unfortunately my brother and I were not party to the wills discussion, it was between my parents and their lawyers, who quite firmly (verging on rudely) excluded us from the process. I appreciate there are conflict of interest issues on what is an extremely sensitive issue, but the upshot is that the will structure was all as recommended by the lawyers with no other input. My folks don't read forums or any other place like this to get advice. This was done in a way that puts everything into a trust within the will, and I highly doubt it can be changed now, so that is pretty much that.
  • RAS
    RAS Posts: 35,976 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    It was right and proper that you were excluded from the consultation with the solicitors.

    I'm surprised your parents weren't sent or given a draft copy of the wills to review before they went back to get them signed and witnessed
    If you've have not made a mistake, you've made nothing
  • Sulaco86
    Sulaco86 Posts: 26 Forumite
    Part of the Furniture 10 Posts Photogenic Combo Breaker
    RAS said:
    It was right and proper that you were excluded from the consultation with the solicitors.

    I'm surprised your parents weren't sent or given a draft copy of the wills to review before they went back to get them signed and witnessed
    They were sent them, and they shared them with my brother and I for our comments and then it was my parents who asked us to come along and assist. The solicitors then pushed us out, which bearing in mind it wasn't actually our idea to be there in the first place was quite abrupt and rude. I totally understand the COI issues there, but that doesn't mean they have to be rude about it.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.8K Banking & Borrowing
  • 253.4K Reduce Debt & Boost Income
  • 454K Spending & Discounts
  • 244.8K Work, Benefits & Business
  • 600.2K Mortgages, Homes & Bills
  • 177.3K Life & Family
  • 258.5K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.