Income tax on joint property

pmc2112

Hi,

New here and first question!!! My Father, My Wife and I are buying a property together. My wife and I have sold our house and my Father has sold his house and we are combining the proceeds to buy another house.

My Father is putting more money towards the new house than we are.

Will any of us be liable to income tax on the new house?

CLAPTON

assuming you are not letting out any part of the house and so it produces no income then no
whyever would it?

pmc2112

CLAPTON wrote: »

assuming you are not letting out any part of the house and so it produces no income then no
whyever would it?

This paragraph from the HMCE website

If both you and your children sell your homes, pool your money and buy a new home as joint owners to live in together, the part belonging to you will be considered part of your estate for Inheritance Tax purposes.
If you don't make equal contributions to the purchase, or don't occupy the same share of the property as you purchased, you may have to pay Income Tax as your share may be classed as a pre-owned asset.

CLAPTON

the pre-owned assetts rules are designed to stop people e.g. giving away asssets to avoid IHT but then continuing to enjoy those assetts.
so parent sells a house, gives the money to the offspring, then the offspring buy another house and the parent lives there rent free... so as long as the parent lives 7 years from the 'gift' the amount is excluded from IHT but the parent continues to enjoy the benefits.

I think that in your case of a genuine move to a joint property then if the ownership was tenants in common (rather than joints tenants) no transfer of assetts has taken place so there would be no concern about pre-owned assets.

pmc2112

Thank you, that's pretty much cleared it up!:beer:

jennifernil

What would be the situation if a parent sells their house to their child at market value, but gifts the child some money to enable them to make the purchase (i.e. adds to their deposit), and then moves into the granny flat in the property while the child lives in the main house?

sya220

We have been marrived for over 30 years, but our home is registered in my name only. In order to make use of the double IHT threashold, I understand that as long as my spouse is a "Tenant in Common", we should be OK to do that. Please advise what do we have to do? Do we inform the Land Registry? Do we inform the Tax Office? Or can it do if we just mention it in our wills?
Many thanks in advance.

CLAPTON

sya220 wrote: »

We have been marrived for over 30 years, but our home is registered in my name only. In order to make use of the double IHT threashold, I understand that as long as my spouse is a "Tenant in Common", we should be OK to do that. Please advise what do we have to do? Do we inform the Land Registry? Do we inform the Tax Office? Or can it do if we just mention it in our wills?
Many thanks in advance.

in order to use the double IHT allowance you merely need to leave everything to your spouse and they merely need to leave everything to you (on first death)

it has nothing specific to do with property ownership

sya220

This is very reassuring. It means a simple mirrored wills can do. Many thanks.

sya220

Sorry, CLAPTON, on second thought, says if my spouse dies first, she does not have much asset, and the house is not in her name and he never works. She passes on a little than nothing to me. After I die, my total asset left to our children including the house is £650,000. Will the tax people argue that my spouse had no asset in the first place, so the double IHT threashold will be unvalid?
Thanks again.

jennifernil

No, that makes no difference.

I hope, as your wife does not work, that you are putting savings in her name to use her personal allowance?