The residence nil rate band (RNRB) allows a family home to be passed on to direct descendants free of inheritance tax (IHT). An estate will be entitled to theA�RNRBA�if the:
- individual dies on or after 6 April 2017;
- individual owns aA�home, or a share of one, so that ita��s included in their estate;
- individuala��sA�direct descendantsA�such as children or grandchildrenA�inherit the home, or a share of it; and,
- value of the estate isna��t more than A?2mA�($2.5m, a��2.3m).
The rule can apply to any one home included in the estate as long as it was lived in by the deceased at some stage before the death. The home doesna��t even have to be in the UK. However, it does have to be within the scope of IHT and it must be included in a persona��s estate.
The British government did not intend the RNRB to stop individuals from downsizing or selling their property. So they added a rule, which broadly speaking, means the value of the estate made from downsizing or disposal of the property is eligible for the allowance. The value of the home for RNRB purposes is the open market value of the property minus any liabilities secured on it such as a mortgage.
To make use of the new allowance the recipient must be a child, grandchild or other lineal descendant or a spouse or civil partner of a lineal descendant. Ita��s important to note that direct descendants dona��t include siblings, nieces and nephews or other relatives. The RNRB will eventually allow up to A?175,000 of property wealth, per person, to be passed on with no IHT liability. However, it is being phased in and in the 2017-18 tax year it will be A?100,000.
For deaths in the following tax years it will be:
A?100,000 in 2017 to 2018
A?125,000 in 2018 to 2019
A?150,000 in 2019 to 2020
A?175,000 in 2020 to 2021
Are you British? Do you own Property anywhere? Is your total Estate worth A?2 million or less? Contact me nowa��a��a��..