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Lebna has a chargeable estate valued at £980,000. His estate includes a main residence valued at £340,000 on which
there is an outstanding interest-only mortgage of £152,000.
Under the terms of his will, Lebna has left his entire estate to his son.If Lebna were to die today, 1 March 2019, what is the total amount of residence nil rate band which will be
available when calculating the IHT payable on his chargeable estate?
A £125,000
B £250,000
C £340,000
D £188,000HERE the answer is 340,000 – 152,000 = £188,000 (D)
I AM NOT GETTING THIS ANSWER, because RNRB IS always 125000. and neither he has his spouse RNRB available.
kindly help. thanks in advanceI actually came here for this question – it should be £125k available for him and another £125k from his wife as she never used hers. I am not sure how they came to that figures – the question is asking about the nil rate band not the residence value after mortgage interest. error in the answer sheet!!
It’s as it is the lower of:
– total residence nil rate band (125k + 125k)= 250k
– actual main residence (340k-152k)= 188kWhen you calculate the death estate, any outstanding mortgage (not endowment mortgage) is deducted from the property. The value of the estate is calculated before any deductions of NRB and RNRB. The residence nil rate band can only be deducted from the main residence that is being left to a direct descendent, in this case the main residence is 340k. The main residence value after the deductions of the outstanding mortgage is 188k, you can’t deduct any more than this, even though the partners full 125k RNRB is available.
Therefore, the answer is 188k.
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