Inheritance TAX due on property?

System

antrobus wrote: »

No it's correct. A joint tenants share of property is included in the value of their estate for the purposes of IHT. It's just not that easy to escape the clutches of IHT.

But any IHT liability (if any) will be on the surving tenant on their death and not the first deceased's estate.

In a joint tenancy the house is outside probate and IHT because it is WHOLLY owned by ALL tenants. Therefore on the death of one tenant there is no inheritance as the surviving tenants already own it. That is not to say that IHT will not be payable on the death of the surviving tenant.

cte1111

The IHT will be paid out of the residue of the estate. So if the deceased has made specific bequests then said in his will, I leave the residue of my estate to X, the tax is paid out of X's share.

What was in the rest of the will? Is the estranged wife challenging it at all?

getmore4less

!!!!!! wrote: »

But any IHT liability (if any) will be on the surving tenant on their death and not the first deceased's estate.

In a joint tenancy the house is outside probate and IHT because it is WHOLLY owned by ALL tenants. Therefore on the death of one tenant there is no inheritance as the surviving tenants already own it. That is not to say that IHT will not be payable on the death of the surviving tenant.

That is not correct

The asset passes by survivorship but a share of the value of all jointly owned assets becomes part of the assesment for IHT.

here are the notes for the rimple IHT205 forms.

http://www.hmrc.gov.uk/cto/forms/iht206-2006-1.pdf

page 7.

Jointly owned assetWhat about assets owned jointly with other people?
Bank and building society accounts, stocks and shares and houses and land
are the assets most usually owned in joint names. If the deceased owned any
assets jointly with another person or people, you will need to include a value on the form for the deceased's share of the assets in the estate.

System

From http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm

Leaving your home in your will

If you and your spouse or civil partner own your home as joint tenants, the surviving spouse or civil partner will automatically inherit the home and there will be no Inheritance Tax to pay on the property when the first partner dies.

It is outside IHT calculations. Jointly owned in the guide is where each person owns a share of assets, not, as in the case of joint tenancy where each tenant own all and not a share.

It does not form part of the deceased's estate!

getmore4less

!!!!!! wrote: »

From http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm
It is outside IHT calculations. Jointly owned in the guide is where each person owns a share of assets, not, as in the case of joint tenancy where each tenant own all and not a share.

It does not form part of the deceased's estate!

That ONLY applies to spouse or civil partners that have the spouse exemption.

All other joint ownership of assets has a share included in the assesment of IHT.

from the guide(same page 7).
If the deceased held an asset with someone else, and
their share passes automatically to the other joint owner,

We call the asset joint asset’ and the joint owners are known as ‘joint tenants’


Joint bank accounts are usually owned in this way. You should work

out the value of the deceased’s share in a joint asset by dividing the value of the

whole asset by the number of joint owners. Include this value in box 9.2.

However, you should read the paragraph ‘valuing joint bank accounts’ on page

10 of these notes.


the full form is part of the IHT400 set.

http://www.hmrc.gov.uk/inheritancetax/iht404.pdf

System

But neither tenant owns a share. They both own 100%. How do you complete the form?

getmore4less

!!!!!! wrote: »

But neither tenant owns a share. They both own 100%. How do you complete the form?

I suggest you read the IHT notes for both 205 and 400, to clear any other misunderstandings you have.

They explain how to joint values assets for IHT or point to docs that help with this process as well as lots of other usefull information.


edit: add the iht400 notes in case you can't find them

http://www.hmrc.gov.uk/inheritancetax/iht400-notes.pdf

antrobus

getmore4less wrote: »

I suggest you read the IHT notes for both 205 and 400, to clear any other misunderstandings you have.

They explain how to joint values assets for IHT or point to docs that help with this process as well as lots of other usefull information.

This might provide some clues as well;

How to value joint property or assets for Inheritance Tax
http://www.hmrc.gov.uk/inheritancetax/how-to-value-estate/joint-property.htm

holly_hobby

There is a lot of confusion here ..... and an awful lot of wrong and mis-understood data beign provided as accurate ..........

Please read my posts they are correct and explain the situ ..

Firstly - NO assets, capital or chattels held or of CONTINUED benefit to the decd at death escapes IHT (UNLESS PLACED IN TRUST (even then there can be exposure), or are an EXPIRED PET )

We have an UNMARRIED COUPLE here - the ramifications re estate on death I have already discussed (and a SURVIVING WIFE in the mix - whom is not our concern at this point)

!!!!!! - your interpretation of regs and advice to the OP is completely inaccurate and wholly misleading.

There is an IHT calc on the whole of the decds estate, WHICH INCS THE VALUE OF 50% OF MUM HOUSE AT DEATH i.e an asset of his, and his equittible share.

It is also physically impossible for them to both own 100% of the property !!! Jointly and severally (which you are obv getting confused with), relates to mge liability (singularly and jointly responsible) - in the case of actual ownership, under joint tenants the division is automatically of equal shares, with upon 1st death (and subsequent deaths) the equittible share of the decd physically passing to the survivor (s) - (as you can have up to 4 "joint owners").

In the case of Tenants In Common - the equittible share's are effectively ringfenced and essentially held on a wholly individual basis (i.e there is NO automatic transfer to fellow owners on death). The share can be held in unequal proportions - but all equittible holders combined shares will TOTAL 100% (no more) - with the indviduals being able to bequeath their "ringfenced" share via a Will bequest, OR it will go through the laws of intestate if no valid Will at the time of death - UNDER A TIC ARRANGEMENT THERE IS NO AUTOMATIC TRANSFER OF OWNERSHIP TO THE SURVIVING OWNERS.

There is ONLY LIABILITY TO ANY SURVIVING TENANT ON a JT - IF THERE IS any IHT LIABIILTY, AND IS PORPORTIONATE. If TIC arrangement - THE ESTATE (via the Executor) pays the bill before settlement of the bequest.

If this is a TIC arrangement, probate means that for Mum to have recd Dads share - I would expect that the administration of the estate has been finalised, and as no contact, any IHT was absorbed by the estate OR there is no IHT due.

Jnt tenants - probate could still be going on (as we have an automatic TOE on death) and there may be a liability, as discussed at length in my early posts.

To repeat myself - we will only know the situation and any exposure of the estate, by advice from the Executor - and thats where Mum needs to direct her energy (unless OP (as she is elderly) has a PA arrangement in place, and can administer on her behalf).

Do please check your posts for accuracy before posting and "correcting" others, or at least, advise the OP that you have no working or professional knowledge of the issues - and its simply your interpretation and opinion of matters, rather than known fact being published. Although qualified to advise, I am not a probate solicitor, so nevertheless consider it common duty and sense to advise them of such, and that they should seek guidance from a suitably licenced practitioner.

A forum is only for discussion, due to its open nature and contribution from professionals, those "who've been there", and lets say "enthusatic helpers" ! - none of which should be wholly or blindly relied upon, AND always independently verified.

In conclusion, I have given guidance on the basics of IHT, how to proceed and that they need to CONTACT THE EXECUTOR, and their own family solicitor for verification and further guidance

Hope this helps

Holly

holly_hobby

cte1111 wrote: »

The IHT will be paid out of the residue of the estate. So if the deceased has made specific bequests then said in his will, I leave the residue of my estate to X, the tax is paid out of X's share.

What was in the rest of the will? Is the estranged wife challenging it at all?

NO - the IHT is paid/put aside before any bequests are made, but after all liabilties have been discharged i.e it is the NET value of the estate that is the basis of any IHT calc, and from which the bill is settled. (unless the estate is unable to wholly settle the IHT liability, at which point HMRC will make election on remedial action for collection).

This suggests to me that if a TIC Mum has no concerns re reciving a IHT demand. (to which HMRC will allow payment of IHT over a prolonged period -will give details if need by Mum)

Hope this helps

Holly