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Where Taxpayers and Advisers Meet

Change of ownership from tenants in common to joint owners

trainline
Posts:16
Joined:Sat Oct 02, 2021 4:25 pm
Change of ownership from tenants in common to joint owners

Postby trainline » Sun Jan 23, 2022 9:33 am

Good morning

Just received a TR1 from co-owners' solicitors. Currently four of us co-own a property. Two owners have decided to gift their shares to their three nieces and nephews. Given this results in 5 co-owners, a deed of gift has been drawn up expressing the sharing of the benefit between all 5 but only 4 owners can appear on the deeds.
However, my wife and I now appear on the TR1 as joint owners, not as tenants in common. I believe this has potential issues for inheritance as on death the share would pass to the other joint owner irrespective of wills but more for this forum, might the change in ownership have any tax impacts, CGT for example?

Thanks
T

someone
Posts:543
Joined:Mon Feb 13, 2017 10:09 am

Re: Change of ownership from tenants in common to joint owners

Postby someone » Sun Jan 23, 2022 7:21 pm

It's probably ok.

Legal title is always owned as joint tenants.

Your OP says 'joint owner' which is not a legal term.

What is important is what the DoT says. If it says the benedficial ownership is tenamts in common then that is what you want.

If you are unsure you should ask the solicitors what is happening. If they can't/won't advise then ask your own solicitor. The parties wanting to gift their share should expect to pay your reasonable legal expenses.

trainline
Posts:16
Joined:Sat Oct 02, 2021 4:25 pm

Re: Change of ownership from tenants in common to joint owners

Postby trainline » Mon Jan 24, 2022 12:52 pm

Thanks Someone,

I doubled checked the documents.

a. The TR1 used for the last transfer stated that the current 4 owners are to hold the property on trust “as to 25% for the benefit of [person’s name] absolutely”

b. The deed of gift (to which only the gifters and griftees are signatories, not my wife and I) states that the property is currently owned “jointly” by the four owners “as tenants in common”. It references the new transfer stating that “the legal estate in the property was transferred ….into the joint names of Mr and Mrs xxxxx [my wife and I] and the children to hold as tenants in common in unequal shares”. It goes onto state that the property shall be held “as to one half for the benefit of Mr and Mrs Wells absolutely….as to the remaining half for the benefit of the [3 children] as tenants in common in equal shares”

c. The new TR1 states that the property is to be held on trust “ 1. As for 50% for the benefit of [my wife and I] as beneficial joint tenants. 2. As to 50% for the benefit of [3 named children] as tenants in common more particularly set out in a deed of gift dated [date]”

Does this maintain our ownership status as tenants in common?

Thanks
T

someone
Posts:543
Joined:Mon Feb 13, 2017 10:09 am

Re: Change of ownership from tenants in common to joint owners

Postby someone » Mon Jan 24, 2022 6:22 pm

c. The new TR1 states that the property is to be held on trust “ 1. As for 50% for the benefit of [my wife and I] as beneficial joint tenants. 2. As to 50% for the benefit of [3 named children] as tenants in common more particularly set out in a deed of gift dated [date]”

I'm not a lawyer (or an accountant) but I'll give you a full refund on the cost of this "advice" if it's wrong :-)

I think this means that you and your wife own half of the property. So regardless of what happens to the other owners you will continue to own half of the property.

But your half is owned between you two as joint tenants - so if one of you dies, it will pass to the other outside of any wills you might have made and only when the second of you dies will it be distributed according to their will.

It's not clear whether you want 25%, 25%, three children with 50/3 each explicitly so that you and your wife can leave your 1/4 share in your wills or whether the suggested ownership is what you want.

FWIW it's (fairly) trivial to sever a joint tenancy so if you do want to retain the 25%/25% split then the solicitors doing this might suggest to submit the TR1 as is and then submit whatever form it is that severs a joint tenancy. But either way I'd expect them to either correct the TR1 or submit the form you need without charging you if you didn't ask for this change to beneficial joint tenants for your ownership of your half.

trainline
Posts:16
Joined:Sat Oct 02, 2021 4:25 pm

Re: Change of ownership from tenants in common to joint owners

Postby trainline » Tue Jan 25, 2022 3:57 pm

Thank you Someone, you confirm my interpretation.

Regards
T


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