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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I hold power of attorney mother, and she has recently

Customer Question

I hold power of attorney for my mother, and she has recently moved from her home of 37 years to a care home. She would like my sister and I to inherit this house when she dies.
She has been widowed for 60years and so would not be eligible I suspect for the spouse's allowance of the new inheritance exemption, but if we sell the house before her death will the allowance be given on a value equivalent to the house, or does the exemption not apply to such funds.
How would one put funds of this nature by if they may eventually be eligible?
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi.
Can you explain what you mean by "but if we sell the house before her death will the allowance be given on a value equivalent to the house, or does the exemption not apply to such funds." and by "How would one put funds of this nature by if they may eventually be eligible?"
Customer: replied 11 months ago.
We are considering selling the house on my mothers behalf and investing the proceeds, but fear this may alter the entitlement to the new inheritance tax allowance which is due to come into being in 2017 -2020. can proceeds from the sale of a house be conserved in a way that they can still be treated as the property itself or is this only the case at the time of death. I find the guidelines on line ambiguous .
Expert:  TonyTax replied 11 months ago.
Thanks.
Leave this with me while I draft my answer.
Expert:  TonyTax replied 11 months ago.
Hi again.
If the property is sold after 8 July 2015, then you can still claim the IHT family home allowance so long as an equal amount of assets are left to direct descendants. The article here explains the rules very well:
http://www.telegraph.co.uk/finance/personalfinance/tax/11779932/New-inheritance-tax-perk-the-seven-key-questions.html
Remember that your mother will qualify for main residence CGT exemption for the period that she lived in it plus the last three years of ownership. Take a look at the notes here:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/264601/13._Capital_gains_tax_private_residence_relief_final_period_relief.pdf
As far as the transferable nil-rate band is concerned, you may be able to claim it but you should read the notes here and here:
http://www.hmrc.gov.uk/manuals/ihtmanual/IHTM43011.htm
http://www.pruadviser.co.uk/content/knowledge/technical-centre/transferable_nil_rate_band/

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