Inheritance tax and joint tenants/ tenants in common

shadey02

I need help deciding which is the best option for me and my brother. We have both inherited my mums house and want to keep it and live in it but need help deciding whether to change the deeds to a Joint tenant or tenants in common?

Which is the best option for paying less inheritance tax when one of us dies?

sammyjammy

Will either of you likely by liable for IHT anyway? If you own it joint tenants it automatically belongs 100% to the survivor, if neither of you want to leave your share to someone else this is what you need, if you want to leave your share to someone else you have to use tenants in common.

Keep_pedalling

If you want the surviving sibling to inherit the whole hose on the first death then it is going to make very little difference, but it could make a big difference on the second death. Do you both want the house going to the same beneficiaries once you have both died?

The best option is likely to be TiC combined with appropriate wills.

PS. This is more appropriate to the Deaths, funerals and probate board so I have asked for it to be moved.

shadey02

yes probably if the value of the house and assets may exceed the IHT threshold

I presume IHT would be only on 50% of the house value if I did joint tenant and one of us dies?

shadey02

That is something we have to discuss about who benefits after we both have gone but will probably be the same beneficiaries

poseidon1

https://forums.moneysavingexpert.com/discussion/6655016/inheritance-tax-and-joint-tenants-tenants-in-common

Neither ownership option will save/ avoid IHT where siblings sharing a home inherit from each other on first death, and the share inherited exceeds £325K.

This IHT 'injustice' as between siblings sharing the family home, was challenged in the famous Burden sisters European Court of Human Rights case discussed below-

https://www.harpermacleod.co.uk/insights/proposed-reform-to-inheritance-tax-would-allow-siblings-to-benefit-from-tax-advantage/#:~:text=The%20Burden%20of%20Inheritance%20Tax,reform%20to%20the%20tax%20system.

As will be seen, although UK draft legislation was drawn up to redress this specific situation, it went no further and quietly withered away.

In the OPs case If the property is valuable enough ( say £700k+) they could consider insuring each other's lives for the IHT exposure, which would provide the survivor with funds to pay the IHT in due course.