Who Pays Inheritance Tax on Jointly Owned Property?

I understand that you may have found yourself in a situation where you need clarity on inheritance tax for jointly owned property. Let me explain it to you using simple language.

What is inheritance tax?

Inheritance tax is a tax that is applied when assets are transferred from a deceased person to their beneficiaries. The specific rules for inheritance tax can be found on the Gov.uk  website. If you are unsure what your liabilities are it is always worth checking with a professional advisor who will be able to provide you with information relating to your specific situation. If you want further guidance on how to sell a house you inherited house check out our guide.

Do I have to pay inheritance Tax?

When it comes to jointly owned property, the inheritance tax implications depend on how the ownership is structured. Let’s go through a couple of common scenarios:

Joint Tenancy with Right of Survivorship

In England, Wales and Northern Ireland, property can be owned as ‘joint tenants’. In Scotland this is known as a survivorship clause. So, if a property is held as joint tenancy with right of survivorship, it means that when one owner passes away, the property automatically goes to the surviving owner(s). All joint owners will have their names on the deeds, the deeds are changed to the names of the surviving co-owner(s) once a death certificate has been gone to the Land Registry. This transfer usually happens outside of the probate process, which means it generally avoids inheritance tax and provides security to the surviving spouse or partner that will not need to vacate their home following their partners death. However, what is important to note is 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 share of the property. If one owner dies, their share is typically distributed according to their will; it does not automatically pass to the other joint owners. In the case of tenancy in common, the estate of the deceased owner is responsible for paying inheritance tax on their share. The executors or administrators of the will have to arrange the payment of inheritance. They can use funds from the estate to make the payment. The amount of tax will depend on the value of their share and the tax laws.

It’s essential to remember that these are general scenarios, and there may be additional factors and exemptions that can influence the inheritance tax treatment of jointly owned property. To fully understand your rights and obligations, Gaffsy strongly recommends consulting a tax professional or HMRC as they will be able to provide you with specific guidance based on your unique circumstances.

Selling an inherited house?

If you have decided to sell an inherited property, been granted probate you have 3 options the traditional estate agents, auction houses, cash house buyers. There are pros and cons for each.

Estate agents

The positives are that they have in-depth knowledge of the local market, they can show your property across numerous platforms and will bid a higher price for your property. The negatives are that the selling process is long 3-9 months, you run the risk of finding yourself in a property chain, where your sale falls through and you will have estate agent fees to pay which are a percentage of the final sale value of your property

Auction houses

Selling your inherited property through an auction house you will have a quicker sale than through the traditional estate agent and you will have certainty of sale once the hammer falls the buyer is obligated to proceed with purchase. The problems are that the outcome of an auction is uncertain and therefore your property may not sell or it may not go for the price you hoped. There are also auction entry fees to pay for having your property included in the catalogue.

Cash house buyers

Selling an inherited house to a cash house buyer will provide you with a hassle-free quick house sale. There is no need to carry out repairs or perform property facelifts, cash house buyers like Gaffsy will buy any house in any condition.  There are no fees or expenses they buy your house for cash. The final quoted price for your property will be the sum you receive on completion.  There are no time delays or potential sales falling through. The price offered will be lower than that offered by the traditional estate agent yet as they provide the cheapest way to sell your property you still finish up in a better financial position

Contact Gaffsy an industry leading cash house buyer for your no-obligation free cash offer today. One of our experts will respond to your request and look after you throughout the process. We know exactly what not to do when it comes to inherited house sales and ensure there are no complications or hidden fees. Your personal team member will fully cater to your needs, answer your questions and work on a time line that suits you. If you would prefer to speak to us in person please call us on 0207-459-4546 or if you have a question that you would prefer to email Gaffsy .