Getting removed for a "joint tenants" ownership

markb1_2

I hope this is the best place to post these questions.

My mother (86) and my aunt (91) jointly own the house that my mother lives in. It was purchased in 1999 and my mother has lived in it since, my aunt has never lived there. As I understand it, it is a “joint tenants” ownership, meaning that they both own the whole property. My aunt wants to be removed as a "joint tenant" for inheritance tax planning purposes as she also owns her house which in itself will take her estate to over the £325k inheritance tax threshold, and she doesn’t want her death to affect my mother’s ability to keep the house she's lived in for over 20 years. So my questions are:

1. How do you get removed from a “joint tenants” ownership?

2. Can you remove yourself from “joint tenants” ownership without there being an inheritance tax liability in the future?

TIA for any input/advice.

RAS

Is aunt single or divorced? If she is widowed, different rules apply.

markb1_2

My aunt is single.

Keep_pedalling

Your aunt is going to have to live to 98 if she is ti avoid IHT on this property, but there is another tax issue here. If she gifts you mother her share of the house she is going to be hit with an immediate CGT liability on the gain in value over the last 24 years. If she fails to survive 7 years the tax will be higher as CGT will have been paid and the save level of IHT will apply.

The priority here should be to protect your mother’s security and prevent your aunt inheriting the whole house in the event your mother dies first.

They should split the tenancy without delay and make appropriate wills. Your aunt could leave your mother her half of the house free of taxes leaving any IHT to come out of the remainder of her estate 

RAS

Do double check with the Land Registry, costs £3 as long as you avoid the fake names, that it is a joint tenancy not tenants in common. 

Otherwise, get a legal appointment ASAP and @Land_Registry for DIY form advice.

Land_Registry

If this they want to change it from joint names to just Mum’s sole name then the two of them would transfer the whole legal title to just Mum
https://www.gov.uk/registering-land-or-property-with-land-registry/transfer-ownership-of-your-property
If they want to sever their joint tenancy as suggested then the following explains how to do that on the register. But the ‘real work’ is re the wills/trust 
https://www.gov.uk/joint-property-ownership/change-from-joint-tenants-to-tenants-in-common

markb1_2

Thank you for all your replies, all very helpful in pointing me in the right direction with this.

As a side question, am I right in thinking that if nothing is changed, with my mum's property being worth around £650k now, that when my aunt dies there will effectively be £650k extra value to her estate incurring £260k IHT, and then when my mum dies there would be IHT on her estate over £325k, meaning around another £162k IHT, so £422k of IHT would have been paid on the property?

poppystar

Even if aunt does die first (not necessarily the case) then why would that affect your mother’s ability to keep the house? Surely as things stand it would become hers? 

If mother does die second then, assuming she leaves the property to you, you can claim RNRB of £175k in addition to the NRB of £325k 

Keep_pedalling

markb1_2 said:

Thank you for all your replies, all very helpful in pointing me in the right direction with this.

As a side question, am I right in thinking that if nothing is changed, with my mum's property being worth around £650k now, that when my aunt dies there will effectively be £650k extra value to her estate incurring £260k IHT, and then when my mum dies there would be IHT on her estate over £325k, meaning around another £162k IHT, so £422k of IHT would have been paid on the property?

If your aunt dies first the houses passes to your mother and dose not form part of her inheritable estate, but For IHT purposes half the house value is subject to IHT. I say half but that value can be reduced by 15% in the case of jointly owned property.

If your mother died first then her estate would lose the residential NRB because her share of the property did not go to a direct descendant, and much of her NRB would also be lost. The whole house would then fall subject to IHT on your aunts death.

The tenancy needs to be split as a matter of urgency, and it takes only one of them to do it.