Inheritance Tax with Joint Tenant property

DarrenL124

Hi, I have been looking at some things with my wife and Mother in Law and she has asked questions on Inheritance Tax that I cannot answer. The scenario is, my wife, Mother in Law and I are Joint Tenants on the deeds to the property that we live in, this was done as we built a large extension and took out a mortgage to pay for this (current mortgage remaining is £134k); the property is probably worth about £750k. The Mother in Law also owns pasture land of approximately 50 acres (value about £400k) on a separate deed to the house and has savings of approximately £250k. My wife also has 3 sisters to bring into the mix.

My understanding is that the Joint Tenants (my wife and I) will automatically inherit the property, but the value of the inheritance will be liable for IHT?
I did read somewhere that there is an additional value to take into account if we are resident in the property (which we are)?

Any advice appreciated on how I can calculate the liabilities for her.

Keep_pedalling

What is MILs marital status? If she is a widow did her husband leave her his entire estate?.

On a separate point holding your current home as JTs will have IHT consequences for MILs estate if either you or your wife pre- decease her. It would also loose part of the transferable NRB for the surfing spouse, so better to change that to TiC.

DarrenL124

MIL is a widow and the entire estate was left to her. For the JT, she doesn't want the house to go to the other sisters so chose the JT as well as changing her will.

Keep_pedalling

DarrenL124 said:

MIL is a widow and the entire estate was left to her. For the JT, she doesn't want the house to go to the other sisters so chose the JT as well as changing her will.

As it stands your mother has an estate of around £750k including her share of the home so her estate does not currently have an IHT issue. I think the reasoning for JT is seriously flawed, your sisters in law are never going to have successful claim on the house. Even if MIL left them nothing they would not be able to make a claim on a specific asset. 

There is far more risk with you and / or your wife pre deceasing her and potentially putting her estate into IHT territory, and using up some of your NRB in the process. JT also means you cannot put your share of the property in your own wills which is important if you have children. If she is really worried about it then she could always gift her share now as she has plenty of other assets to fall back on should she need them.