Inherited house for BEL registration

bearshare

Hi all. Any guidance on this please?

In-laws have both died and left their house shared equally between 3 siblings. The house has been rented out with tenants in place.The house will probably be sold in a few years time. IHT is not an issue.

We want to ensure that any income is against the three names, for tax purposes, and any future capital gains is also split three ways.

1) With this in mind, when does the registered owner of the house need to be changed to the new joint onwners?

2) in one case, it would be more tax efficient if the income was against the sibling's wife, as she is a non-earner. Does her name need to be in the register as owner for this to work (ie sibling gifts his share of the property to his wife)?

Anything else to watch out for?

Thanks for any help.

B
(Grrrr ...mistake in title and I cannot edit it...)

xylophone

Could the will be varied to leave the share of the property to the wife?

G_M

Has probate been granted@

If no, then subject to everyone agreeing, the Executors could execute a Deed of Variation to the will, leaving the property to whoever they all agree.

If yes, the Executors sould now distribute the Estate which means transferring the property into the names of the Beneficiaries.

bearshare

Thanks for replies. Yes, probate has been granted.

Reading around, it seems registering a property into new names is not very strict, with people leaving until they sell (or even after, with new owners names), so I am wondering if this has anything to do with to whom the income is attributed.

Futhermore, you can do a spousal transfer of capital assets without triggering a capital gains calculation event, so presumably part ownership of the house could be transferred to his wife easily: I dont know if the name on the registry would have to be changed.

B

Tom99

[FONT=Verdana, sans-serif]Sibling can do deed of variation at any time up to two years after death to transfer inheritance to wife, probate is not an issue.[/FONT]
[FONT=Verdana, sans-serif]You could also consider just assenting the beneficial interest to the 3 beneficiaries rather than the legal interest. This does not need to be registered at Land Reg so is quicker and cheaper.[/FONT]

getmore4less

The leqal ownership is a convenience

You need to decide what you need to convince HMRC what the beneficial ownership is and who should be paying any taxes.

bearshare

Thanks for replies. On further investigation, to be watertight, there should be a Deed of Variation (to change the leagle ownership) or a Declaration of Trust, (to change the beneficial owners)?

I am unsure a) who needs to see the Declaration of Trust, and if it is just an agreement between the parties involved - and if the parties are just the husband and wife or all legal owners.

And b) Can they not just tell the HMRC?

00ec25

bearshare wrote: »

Thanks for replies. On further investigation, to be watertight, there should be a Deed of Variation (to change the leagle ownership) or a Declaration of Trust, (to change the beneficial owners)?

I am unsure a) who needs to see the Declaration of Trust, and if it is just an agreement between the parties involved - and if the parties are just the husband and wife or all legal owners.

And b) Can they not just tell the HMRC?

if they are huisband and wife then HMRC will tax them at 50/50 UNLESS they tell HMRC that they want unequal treatment.
To do that they would need to a) own the property as tenants in common, (NOT as joint tenants) b) submit a Form 17 and c) have a declaration of trust in place specifying the % to be used by each person.
All 3 steps must be done before they can declare unequal shares

where it is not husband and wife they do not need to tell HMRC upfront about a share split but they would be strongly advised to document a DoT in case HMRC ever challenge them to prove the basis of the tax returns

bearshare

00ec25 wrote: »

if they are husband and wife then HMRC will tax them at 50/50 UNLESS they tell HMRC that they want unequal treatment.
To do that they would need to a) own the property as tenants in common, (NOT as joint tenants) b) submit a Form 17 and c) have a declaration of trust in place specifying the % to be used by each person.
All 3 steps must be done before they can declare unequal shares

where it is not husband and wife they do not need to tell HMRC upfront about a share split but they would be strongly advised to document a DoT in case HMRC ever challenge them to prove the basis of the tax returns

thanks. As above, the house is owned by siblings. One of these wishes all income to received under his wife's name for tax reasons. So, just complete sell assessment as if this was the case, and have a DoT in back pocket, just in case. Got it.

B

getmore4less

The legal owners own the property as a trust for the beneficial owners.
(often these are the same)

You can pass the beneficial ownership without changing the legal owners.

In practice it can be better to have all the beneficial owners as legal owners but as the number of legal owners is limited to 4 this is not always possible.

With 3 people inheriting and potentially 3 spouses that could end up being 6 beneficial owners.

DOV deal with the beneficial ownership not the legal ownership.

bearshare

00ec25 wrote: »

not the way you have written it, no you have not got it, you have in fact got it wrong

I dont think so. As Getmore4less says, they can change the beneficial owner (to his wife) without changing legal ownership.

B

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