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Joint tenants vs Tenants in common

portmoon
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Joint tenants vs Tenants in common

#175867

Postby portmoon » October 23rd, 2018, 10:07 pm

My partner and I own our house jointly. We are not married and I am wondering how my partner could avoid having to pay inheritance tax on the house if I died first. We paid about £35k for our house so it would be worth more than the Inheritance Tax Threshold of £325,000.

In our "Official copy of register of title", under “Proprietorship Register” there is a restriction listed that starts with “RESTRICTION: No disposition of the registered estate by the proprietor…”

From some very limited reading I think I’ve worked out that this means we are tenants in common.

Would my partner be less likely to have to pay inheritance tax on our house when I die if we got it changed so that we are joint tenants?

Many thanks!

Lootman
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Re: Joint tenants vs Tenants in common

#175870

Postby Lootman » October 23rd, 2018, 10:31 pm

portmoon wrote:we are tenants in common. Would my partner be less likely to have to pay inheritance tax on our house when I die if we got it changed so that we are joint tenants?

1) Owning as joint tenants would have no effect on IHT, but might mean you can avoid probate.

2) Upon the first death, the value of property being transferred is half of the house, and not all of it. So even if the value of the equity of the house is over the £325,000 threshold, there may be no IHT due because the computation is based on only half the value of the property.

3) There is an extra IHT-free threshold being phased in which will gradually move that £325,000 number to £500,000 if you own a property.

4) You could always get married to make the IHT problem completely go away for the first death.

DrBunsenHoneydew
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Re: Joint tenants vs Tenants in common

#176288

Postby DrBunsenHoneydew » October 25th, 2018, 7:30 pm

Lootman wrote:
portmoon wrote:we are tenants in common. Would my partner be less likely to have to pay inheritance tax on our house when I die if we got it changed so that we are joint tenants?

1) Owning as joint tenants would have no effect on IHT, but might mean you can avoid probate.

2) Upon the first death, the value of property being transferred is half of the house, and not all of it. So even if the value of the equity of the house is over the £325,000 threshold, there may be no IHT due because the computation is based on only half the value of the property.

3) There is an extra IHT-free threshold being phased in which will gradually move that £325,000 number to £500,000 if you own a property.

4) You could always get married to make the IHT problem completely go away for the first death.

Just to clarify for readers, your point 3) only comes into play when the house passes down a generation, not sideways to a partner.

midnightcatprowl
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Re: Joint tenants vs Tenants in common

#176308

Postby midnightcatprowl » October 25th, 2018, 9:57 pm

Just also to make a point about marriage - if marriage is relevant to this issue. It has become the thing in our society that marriages involve a vastly expensive ceremony, dress, outfits, reception, and something else after the reception such as a dance in the evening. Little or nothing of this is actually necessary. Some neighbours of mine - long term cohabitees - got married a few years back in the Registry Office without telling anyone except her adult children from a previous marriage and his elderly father who attended the ceremony. They wore smart but not special clothes and went out for a local restaurant meal afterwards. The adult children took the photos. I and presumably others were told later and invited to go into their home and admire the photos which I did and was very happy to do and presumably others did too. I'm pretty sure that the reason for the marriage was to ensure that the female partner would not be left in a difficult position if her older male partner died but obviously it would also operate the other way around.

I realise there are many reasons why people can't marry or prefer not to marry. It just disturbs me that so many people who have no objection to marriage don't marry when it might help them over legal issues because of the perceived huge expense when in reality you can be married for little more than the cost of a quite ordinary day out and that marriage is 100% as valid as the jamborees which cost the earth.


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