Estate valuation - joint property ownership

Domain.Rider

Helping a relative with their will - using the Which? wills service, and we're uncertain about the precise situation with a joint-owned property.

The testator jointly owns a house with her daughter, such that they both own the whole property (i.e. NOT 'tenants in common'). The Which? guidance notes say:

If you own a property jointly with another person, both of you have the right to receive all the sale proceeds of, or income from, that property. Neither of you has a distinct share; each of you owns the whole of the property. On your death, the property does not form part of your estate and is not dealt with by your will because the other joint owner is already regarded as owning the whole of the property.

This sounds good, for IHT purposes, but on the HM Revenue and Customs website guidance, it isn't clear; normally the daughter would inherit the house, but in this case she already owns it, and when the testator dies, she'll be sole owner.

Can someone confirm that the Which? guidance is correct - that when a joint owner dies the joint-owned property is not considered part of their estate because it's automatically owned by the other joint owner?

getmore4less

Don't confuse inheritable estate and taxable estate.

for tax purposes 1/2 the value falls within the estate.

as this asset now belongs to a non spouse it is not exempt like it would be where married people own jointly.

include civil partners in the exempt cases.

Domain.Rider

getmore4less wrote: »

Don't confuse inheritable estate and taxable estate.

for tax purposes 1/2 the value falls within the estate.

Ah, OK. So we need to include half the house value when calculating inheritance tax on the estate, even though it's not part of the inheritable estate... ouch.

Thanks for that.