RNRB & Downsizing Relief - Technical Question
HeidiWozniak92
Member
Hi all,
I've got a client who owns a property worth £1.25 mil. She is 82 years old and in relatively good health. She has cash/investments of £460,240.
She intends to sell the property to her daughter at market rate and use the proceeds to:
1) convert the garage to a Granny Annexe for her to live in
2) make gifts to her other children
3) invest in BR products
She IS NOT buying another property and she IS NOT going into care.
We've been debating it in the office and are split pretty much 50%/50% on whether of not she will qualify for downsizing relief... the internet is also providing contradictory answers.
Wondered if anyone had come across similar or had contact info for someone that specialises in this area that I can have a chat to?
Thanks
Comments
What is the reasoning to say downsizing relief won't apply?
Because she's not buying an alternative property (so not technically downsizing) and shes not going into care. Theres seems to be mixed opinion as to whether she needs to own a (smaller) property to benefit, where no care is required.
Am now also wrestling with the potential for Gift with Reservation if she sells property to daughter but then spends her own money on doing up what is now her daughter's property, that she still lives in
You do not need to own a property to claim. QRI would be Nil where no property owned on death with the original property being sold qualifying for a QFRI.
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm46061
GWR can not apply as there is no gift in respect of the property.
The money to pay for the conversion would be a PET (as will the gifts to the other children).
However, the issue could be around interest in possession in respect of the Granny Annexe. I have not had any practical experience of dealing with Probate where a Granny Annexe is involved so not able to help with what value may, or may not, get added back into the estate.