Hi I am trying to sort probate for elderly relatives. I assume that, as a married couple, they held their property as joint tenants rather than tenants in common. But I have also read of people holding property as tenants in common for inheritance tax reasons. How can I check how the property was held?
Many thanks
Al
Checking whether property is held as joint tenants
As it was explained to us. a tenancy in common is preferable for tax purposes if the anticipated estate's assets will exceed the IHT limit. Tenants in common allow only a portion of the property to be included in the calculation of worth at the time of the death of one tenant. ie. Tenant A holds 50% of house worth L 200K. Tenant A passes, his estate adds L 100K to the value of his estate and if his estate is under the IHT limit -his heirs pay no tax. Consider the joint tenancy arrangement, If Tenant A and B are joint tenants, A dies, property passes to B, then B dies 6 months later. The estate now calculates the estate to add L 200K to its worth which is over the IHT limit. Tenant B's heirs have to pay IHT tax of 40% of any amount over the limit. If the limit is L 185K, then the heirs have to buck up L 6K. Careful planning is best done by estate tax solicitors, as you have to consider the liquid assets, the house contents, autos, etc... especially if the estate exceeds the IHT limits.
Our solicitors did not change the deeds in Land Registry to reflect a change in how the property is held. They kept on record/file the dated expressed written wish by both parties severing the joint tenancy and holding the property as tenants in common, specifying the %s held.
If I were being asked to help with estate planning, I would inventory the couples net worth (property, liquid assets and house contents) before considering my visit to an estate planner.
If I were being asked to help with estate planning, I would inventory the couples net worth (property, liquid assets and house contents) before considering my visit to an estate planner.
capital gains
If wife and I were gifted property and went to live in it from rented accommodation would that attract any form of tax like gains ?
I asked the same question and received a complex answer. If you gift a property away, the heirs must have held it 7 years before your death to have the estate avoid tax. Second, there are some pretty complex rules on rerenting gifted property that you must meet in order for the Inland Revenue to recognize this as a legitimate arrangement. Only a qualified estate professional can advise you appropriately.