In the straightforward case of a legally married couple, am I right in saying that each gets a full IHT tax free limit of £325,000, i.e. they get a total of £650,000? Time was when only tenants in common got this while joint tenants got only £325,000 between them.
Also, tenants in common can separately leave their share of a property to anyone they like, regardless of what their partners intend. I presume such gifts automatically await the death of a survivor?
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As far as I know, the type of ownership of property does not in itself affect the IHT position, but there are significant repercussions.
Each civil partner/spouse has a tax-free (IHT) allowance of £325,000, which may be transferred to the survivor after the death of the other, irrespective of property ownership.
Joint tenants
- have equal rights to the whole property
- the property automatically goes to the other owners if you die
- you can’t pass on your ownership of the property in your will
Tenants in common
- you can own different shares of the property
- the property doesn’t automatically go to the other owners if you die
- you can pass on your share of the property in your will
The situation is complicated by a new rule: "From 6 April 2017, a new tax-free allowance of £100,000 (rising to £175,000 by 2020/21) will give each individual an additional allowance to be used against their home, provided they leave it to their children or grandchildren. The allowance can be transferred to a spouse or civil partner if it isn’t used up on the first death."
(Info from www.gov.uk website)
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"... tenants in common can separately leave their share of a property to anyone they like, regardless of what their partners intend. I presume such gifts automatically await the death of a survivor?"
I'm not sure whether the sale of the property can be forced by the inheritor; a good will should have considered this and should have made any necessary provision for it.
My wife is not the mother of my children. The current marital home is bequeathed to my three children in equal shares, but my wife/widow has the right to treat it as her home for as long as she wishes - so my children cannot force her to move out so they can sell it.
If Ambo is considering a real-life scenario I suggest he will need the advice of a good solicitor versed in family law and wills.
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Tenacy and IHT - Focal Point
