Transfer of Unused Nil Rate Band

[ritz13]

Hi Guys

Wondering if you can please help with this ...

So me, my brother and my mum own a UK property that we live in as main residence

Me and my brother are looking to leave and take our names off the property and leave it only in my mum's name

The idea is that my mum will then leave this in her will to distribute the property to me, my brother and my sister

My father passed away in UK in 1987 before we even had this property. My father has an unused nil rate band and we were wondering if my father's nil rate band would be transferred over to my mum, so that she would have £500k + my father's £500k in total..?

And would there be any other tax involved by doing this?

Thanks

[AGoodman]

Yes, assuming your father left everything to mother, she will have two nil rate bands (£650k) plus two additional rate bands to be set against property (currently £250k rising to £350k in 2020).

A transfer should be free of tax as you can benefit from PPR. There is just a small IHT risk if one of fails to survive 7 years - albeit only an issue if your total estates at that point were over the NRB.

Allows your mother to claim 100% PPR when she sells but not great from an IHT perspective if there is a risk that mother's total estate could grow over the nil rate bands.

[ritz13]

Thanks A

So am I correct in saying that if my mum creates a "will" as soon as we transfer our property to her, then as long as she lives more than 7 years from that date we won't have any tax to pay if her estate is less than £1million (£650k + £350k)

cheers

[ritz13]

Oh sorry one more question, does it make a difference if all this time me and my brother were paying the mortgage eventhough my mum was also the owner of the property?

[AGoodman]

The important point is that she leaves the property to you, either by will or on an intestacy. The £1m limit will kick in from April 2020 because the RNRB increases each year (the total is currently £900k).

The 7 year point was regarding you and your brother. You are making PETs to her when you gift her your shares of the property.

You paying the mortgage is fine.