Transfer of main residence

[Yiannis17]

Good morning

I have a situation whereby a widow has decided to move out of her expensive main residence and move to a flat. Her children will now own the main home and ownership transferred on to them.

Should the elderly lady die say within 3 years, does the main residence form part of the estate. Her husband had passed away 3 years early and his share transferred onto her.

[AdamS93]

It is a potentially exempt transfer- you will need to consider it for IHT if she were to pass away within 7 years from the date of gift.

[maths]

It seems on her death she may be entitled to a transfer of her husband's nil rate band which together with her own is worth £650,000.

Also she may be entitled to the Residence Nil Rate Band plus that of her husband's currently amounting to £250,000 as she is "downsizing"; this will depend upon the values of her current home; the new flat and the value of the rest of her estate in addition to the flat (one purchased).