Help with downsizing allowance.

videodoctor

I know that everyone has a £325,000 allowance and also main residence allowance of £175,000.

We sold my fathers home in 2023 for £135,000 to fund his care home fee's.He has just recently passed and are starting to look into his estate.

My question is are we allowed the full £175,000 allowance or just the £135,000 that we got for the house?

Ref44

I don't think there will any additional relief as Dad isn't passing a home to direct descendants.

Famau

You should be entitled to the full £175,000 if the house was sold because the person was going into care. The guidance is quite clear on that.

Also - if your mother pre-deceased him then there may well be a further £325,000 as well. If she is still alive and the estate passes to her then there is no inheritance tax due.

poseidon1

The relief continues to be available via the downsizing provisions, but limited to the £135k sale proceeds.

£175k is only available where a property is valued/ sold at or above that figure.

@Famu is also correct about an additional £325k available if your father was a widower.

Keep_pedalling

With such a low value house does his estate actually need to claim the RNRB especially as it had to be sold to pay for his care costs?

To answer your question only £135k would be claimable if needed. If he was a widower then his estate would have the transferable NRB from his wife’s estate giving up to £650K of exemptions before any RNRB needed to be claimed.

videodoctor

Thanks for your replies. My mother passed a few years ago and had property that went to me and my sister.We have used up all of her allowance so non available to pass to my Dad.

I have valued my Dads estate to be worth £422,000.Assuming we can claim £325,000 + £135,000 that brings our allowance to £460,000 which means no IHT to pay.Does this sound correct?

If so which forms do I have to fill in to complete this process?

Really appreciate your help at this hard time.

Cubicsrube

Sorry for your loss.

The government website has a calculator where you enter all this information and it will tell you whether tax is due and what you need to file for HMRC (and for probate, if needed - the banks/building societies that hold the assets will tell you whether they require probate)

https://www.gov.uk/valuing-estate-of-someone-who-died/estimate-estate-value

Good luck and lots of very generous people on this forum will no doubt help if you run into questions with administering the estate, as they have for me.

Keep_pedalling

Thanks for the clarification. Before you can apply for probate you will need to do a full IHT return in order to claim the residential NRB. You will need to complete form IHT400 plus a number of supplementary forms including IHT435 for the RNRB.

The exact supplementary forms you need will depend on the mix of assets in his estate, but If you look at pages 5&6 of IHT400 you should be able to work out which ones you need.

https://assets.publishing.service.gov.uk/media/69cd100d5cf899414a0bc613/IHT400_04-26fillable__002_.pdf