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HMRC internal manual

Inheritance Tax Manual

Basic Definitions: ‘Qualifying Residential Interest’ and ‘Residential Property Interests’

Although the general principle is that RNRB applies to a person’s home, the legislation refers to a person’s estate including a ‘qualifying residential interest’. This is defined in IHTA84/S8H

There can only ever be one ‘qualifying residential interest’ in an estate, but of course it is possible that a person may have more than one property that either is, or has been, their home.  The legislation deals with this by defining the type of property that can qualify as a ‘residential property interest’ - IHTA84/S8H(2).

A ‘residential property interest’, means an interest in a dwelling-house which has been the person’s residence at a time when their estate included that, or any other, interest in that dwelling-house. For example, this would include a house owned by the deceased that they had been living in. It could also include an apartment that the deceased lived in previously and still owned, but which was rented out at the date of death.

It is also possible for a person to have more than one ‘residential property interest’ in the same dwelling-house. For example someone might own half of their home absolutely, but have a qualifying interest in possession (IHTM16060) in the other half. These are two separate ‘residential property interests’ in the same dwelling-house.

If an estate includes ‘residential property interests’ in only one dwelling-house, those ‘residential property interests’ are automatically a ‘qualifying residential interest’.

If the estate contains ‘residential property interests’ in more than one dwelling-house, the deceased’s legal personal representatives can nominate one, but only one, of those dwelling-houses.

Where the person has more than one ‘residential property interest’ in the same dwelling-house, for example a 50% absolute interest and a 50% interest in possession, all of those residential property interests are combined into a single ‘qualifying residential interest’