Father was becoming increasingly frail. Owns 100% of property (having previously inherited half share from his late wife.)
Daughter moves in to assist father in 2011. In 2012 father gifted daughter 50% of property. Renovations were made to the property under a joint mortgage (father/daughter)
In 2016 father gifted the remaining 50% to daughter. No rent was ever paid.
January 2023, Father dies.
My understanding is that the RNRB and TNRB should be available either within estate or downsizing provisions for the GROB.
Happy that 2012 gift is ok because of co-occupation but does it subsequently get brought into charge because of 2016 PET?
Presumably wife died pre tax year 17/18 and hence no part of her RNRB will have been utilised on her death. It will thus in principle be available for transfer to her surviving spouse.
The two separate gifts of 50% each made to the surviving spouse’s daughter are PETs and if FA 1986 s 102B(4) is satisfied (as seems to be suggested) in respect of each gift no gifts with reservation arise in respect thereof.
The surviving spouse died in 2023 having gifted two separate sets of 50%each in his residence in his lifetime in 2012 and 2016 each to his daughter. On his death he therefore owned no interest in any residence. It is therefore necessary to ascertain if on his death his estate is entitled to any downsizing relief (DR).
DR will only be available with respect to the 50% interest which was given to the daughter on or after 8 July 2015 ie that made in 2016. However, no DR is available re the 50% gift made in 2012.
On the surviving spouse’s death DR will in principle be available (including any transferred RNRB from spouse’s earlier death) assuming assets in the estate of sufficient amount are closely inherited.
If, however, each 50% gift to the daughter (although PETs) gives rise to a gift with reservation (as FA 1986 s 102B(4) not satisfied) then on the surviving spouse’s death the whole of the residence will fall within the surviving spouse’s estate. As the daughter is treated as inheriting the two 50% gifts on her father’s death the father’s estate will be eligible for an RNRB including any transfer from the earlier spouse’s death.
A RNRB (including any transfer) is only available for offset against the death estate (not, for example, against any IHT arising on a PET).
Many thanks Malcolm for considering this. Your thoughts and reply are very helpful. I do think s102B4(a) and (b) are relevant here and so likely DR will be in point.