Has NBR allowance been scuppered?

[Steptoe1]

I was gifted house by widowed friend in june 2014, no solicitors - forms completed by ourselves valve then 620,000. No market rent paid.

Neighbour got involved along with his solicitor, very long story short house put back into joint names April 2015 valve 620,000 forms completed by ourselves.

House opposite(carbon copy) recently sold for 850,000 friend wants to know how big IHT bill likely to be? Friend also has 100k cash in bank? Deceased husband and she had full NRB available.

Can the husbands NBR allowance still be used or did the gifting and gifting back scuppered this?

Friend(age 92) is of sound mind and Im executor and LPA for health and financial.

P.S apologies if the above is blunt I have tried to be as factual and concise as possible.

Many thanks in advance

[maths]

Do you and/or the friend live in the property?

[Steptoe1]

Friend lives in property only

[maths]

As friend continued to live in property after gift to you then the gift was a gift with reservation. In which case the whole of the property remains in his estate for IHT on death.

On the gift by you back to your friend he/she now owns 100% of the property. Effectively the gift with reservation is superceded and the property is simply an asset of your friend and thus falls into an IHT charge on his death.

IHT rate on death 40%.

House valued 850k plus 110k cash equals 960k.

Nil rate band is 325k (or 650k if there is also a transferable nil rate band).

Net IHT charge at 40% thus on either 960k - 325k OR 960k - 650k.

[Steptoe1]

Many thanks for the clarification maths. Her late husband from my understanding made no gifts 7yrs prior to his death. What can I do to check whether his NBR is transferable as it will make a significant difference to the IHT charge?

Would it make a difference if I where to move in and pay half the bills?

[maths]

Check the will; if everything, for example, went to the wife then all nil rate band is transferable. Whoever acted on the death will know what if any IHT was paid or not.

Would it make a difference if I where to move in and pay half the bills?

No. Once you transferred the interest back the reservation ceased. He now simply owns all of the property.

[Steptoe1]

Many thanks again maths, really appreciate the responses....

Check the will; if everything, for example, went to the wife then all nil rate band is transferable. Whoever acted on the death will know what if any IHT was paid or not.

No will, all transferred to wife on survivorship, husband was bed bound for 30+ yrs. No IHT paid out on his death

Would it make a difference if I where to move in and pay half the bills?

No. Once you transferred the interest back the reservation ceased. He now simply owns all of the property.

Just to double check, the house is currently in both our names still?

[maths]

Nil rate band should therefore be transferable.

The issue relates to who owns the beneficial interest in the property?

Legal ownership isn't the key issue.

[Steptoe1]

true that maths, i have no beneficial interest in the property, just my name on a hard drive somewhere on a land registry server!

Really appreciate your time and knowledge sharing! many thanks

[Steptoe1]

Little update, I'm now moving into the upstairs of the property, will this change the tax position? Also is there a way to pay the IHT now as property is increasing in valve year on year?