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Who Pays Inheritance Tax on Jointly Owned Property?

Property Saviour » Buying » Who Pays Inheritance Tax on Jointly Owned Property?

I get it. You may be in a confusing spot when it comes to understanding inheritance tax for jointly owned property. Let me explain it to you using straightforward language.

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What is inheritance tax?

When assets are transferred from a deceased person to their beneficiaries, inheritance tax may be applied. For more information on the relevant rules, please refer to the Gov. uk website.

If you are uncertain of your liabilities, it is advised to seek advice from a knowledgeable professional. They will be able to provide you with advice that is tailored to your circumstances.

Do I have to pay inheritance Tax?

When it comes to jointly owned property, the inheritance tax implications depend on the type of ownership structure in place. Here are two common scenarios:

Who Pays Inheritance Tax on Jointly Owned Property
When assets are transferred from a deceased person to their beneficiaries, inheritance tax may be applied.

Joint Tenancy with Right of Survivorship

In England, Wales and Northern Ireland, property can be owned as joint tenants. In Scotland, this is called a survivorship clause.

If a property is owned as joint tenants with the right of survivorship, then when one of the tenants dies, the property automatically transfers to the surviving owner(s).

All of the joint owners’ names are on the deeds. Once a death certificate is sent to the Land Registry, the deeds are changed to the names of the surviving co-owners.

This transfer usually happens outside of probate, which means it generally avoids inheritance tax and gives the surviving partner or spouse security that they won’t have to leave their home following the death of their partner.

However, it’s important to remember that if the surviving owner(s) decides to sell the property at a later date, there may be tax implications based on the property’s value at the time of the previous owner’s death.

Tenancy in Common

With tenancy in common, each joint owner owns a specific portion of the property. If one owner dies, their share is usually distributed based on their will; it does not automatically pass to the other joint owners.

The estate of the deceased owner is liable for paying inheritance tax on their share. The executors or administrators of the will must arrange for the payment of inheritance tax.

They can use funds from the estate to make the payment. The amount of tax owed will depend on the value of their share and the applicable tax laws.

It is important to bear in mind that these are general scenarios and there may be additional factors and exemptions that can affect the inheritance tax treatment of jointly owned property.

To fully understand your rights and obligations, Property Saviour strongly recommends that you consult with a tax professional or HMRC. They will be able to offer you specific advice based on your individual circumstances.

Selling an inherited house?

If you have come to the decision to sell an inherited property and been granted probate, you have three options available to you: traditional estate agents, auction houses, or cash house buyers. Each of these has both its advantages and disadvantages.

Selling An Inherited House
If you have come to the decision to sell an inherited property and been granted probate, you have three options available to you: traditional estate agents, auction houses, or cash house buyers.

Estate agents

The positives of using an estate agent are their in-depth knowledge of the local market, the ability to market your property on various platforms, and the potential to secure a higher sale price.

The negatives include a longer selling process (3-9 months), the risk of becoming entangled in a property chain, and estate agent fees based on the final sale value of your property.

Auction houses

Selling your inherited property via an auction house will give you a quicker sale than going through a traditional estate agent. You’ll also have certainty that the sale will go ahead once the hammer falls, as the buyer is obliged to proceed with the purchase.

Unfortunately, the outcome of an auction is unpredictable, meaning your property may not sell, or it may not go for the price you had hoped. Additionally, you will need to pay entry fees to have your property featured in the catalogue.

Cash house buyers

Selling an inherited home to a cash house buyer is a great way to get a fast, hassle-free sale. There are no repairs or renovations necessary, as these buyers will accept any property in any condition.

There are no fees or expenses, and the final price you receive on completion will be the quoted amount.

There won’t be any time delays or sales falling through. The offer may be lower than what a traditional estate agent would give, but it still ends up being the most cost-effective way to sell your property.

Reach out to Property Saviour, a leading cash house buyer, for a free, no-obligation cash offer. One of their experts will respond to your request and guide you through the process.

They know exactly what to avoid when it comes to selling an inherited house, and they make sure there are no hidden fees or complications.

Your team member will attend to your needs, answer your questions, and work on a timeline that suits you. If you’d like to speak to someone in person, don’t hesitate to call or email.

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