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Where Taxpayers and Advisers Meet

Joint Tenants and Gifting AGAIN

vik2001
Posts: 61
Joined: Sat Nov 17, 2012 2:24 am

Joint Tenants and Gifting AGAIN

Postby vik2001 » Thu Jan 23, 2020 12:00 pm

if anyone knows a answer to this i appreciate it.

was gifted a property as joint tenants in 2016 which i live in with mother, expenses shared etc.
someone told me after reading a book by Emma Chamberlain and Chris Whitehouse they mention that under the exclusion of GWR it has to be undivided share / specific share. Which is achieved if its tenants in common and not joint tenants.
was then told currently as it is as joint tenants its in GROB, and the 7 year will start again when i sever the tenancy (because of it being in GROB)

does this sound right, most people say joint tenants is fine , but is it to avoid the GWR?

someone
Posts: 396
Joined: Mon Feb 13, 2017 10:09 am

Re: Joint Tenants and Gifting AGAIN

Postby someone » Thu Jan 23, 2020 7:20 pm

if anyone knows a answer to this i appreciate it.

was gifted a property as joint tenants in 2016 which i live in with mother, expenses shared etc.
someone told me after reading a book by Emma Chamberlain and Chris Whitehouse they mention that under the exclusion of GWR it has to be undivided share / specific share. Which is achieved if its tenants in common and not joint tenants.
was then told currently as it is as joint tenants its in GROB, and the 7 year will start again when i sever the tenancy (because of it being in GROB)

does this sound right, most people say joint tenants is fine , but is it to avoid the GWR?
I'm pretty sure it's fine. Under the joint tenancy it's as though you owned 50% for GROB purposes so you would have to share maintenance expenses 50/50 for example.

A while back there were similar arguments about SDLT when a mortgaged property was transferred from joint tenants to single owner. Some solicitors (and possibly accountants) tried to argue that SDLT was due on the entire mortgage. But HMRC never tried that line and eventually the law was changed to make it absolutely clear that joint tenants is deemed to be 50/50 mortgage liability for this purpose.

(In law there is no doubt that each owner is individually liable for 100% of the mortgage - the bank is under no obligation to chase both the owners if the mortgage is in default - but solicitors don't always realize that just because something is true in one area of law doesn't mean that you can also apply it to tax law)

vik2001
Posts: 61
Joined: Sat Nov 17, 2012 2:24 am

Re: Joint Tenants and Gifting AGAIN

Postby vik2001 » Thu Jan 23, 2020 7:36 pm

Thanks

To get around this s102b Gifts with reservation: share of interest in land.
(1)This section applies where an individual disposes, by way of gift on or after 9th March 1999, of an undivided share of an interest in land.

(2)At any time in the relevant period, except when subsection (3) or (4) below applies—
(a)the share disposed of is referred to (in relation to the gift and the donor) as property subject to a reservation; and
(b)section 102(3) and (4) above shall apply.

(3)This subsection applies when the donor—
(a)does not occupy the land; or
(b)occupies the land to the exclusion of the donee for full consideration in money or money’s worth.

(4)This subsection applies when—
(a)the donor and the donee occupy the land; and
(b)the donor does not receive any benefit, other than a negligible one, which is provided by or at the expense of the donee for some reason connected with the gift.

An undivided share cant be joint tenants as its not a share. So 102b doesnt apply. This is what i been told. But maybe from a tax perspective its different

vik2001
Posts: 61
Joined: Sat Nov 17, 2012 2:24 am

Re: Joint Tenants and Gifting AGAIN

Postby vik2001 » Thu Jan 23, 2020 8:55 pm

@someone most accountants tax advisers seem to think you can just take 50% off. But apparently when GROB is in play it works different and has to go via the exemption you trying to overcome.

Worst case scenario here is may be considered a full GROB. So all back in mothers estate. But if i died first under a GROB i dont know if the full value falls into my estate also?

someone
Posts: 396
Joined: Mon Feb 13, 2017 10:09 am

Re: Joint Tenants and Gifting AGAIN

Postby someone » Thu Jan 23, 2020 9:39 pm

Worst case scenario here is may be considered a full GROB. So all back in mothers estate. But if i died first under a GROB i dont know if the full value falls into my estate also?
I'm struggling to imagine a scenario where both you and your mother can have made GWROBs.

I'm assuming that your mother gifted half of her home to you and you now both own it as joint tenants.

I do not believe that gifting via a joint tenancy rather than tenants in common can have any IHT benefits at all - otherwise it would be something that everybody would be advising and the law would have been changed by now.

Try the top of this page:
https://www.samconveyancing.co.uk/news/conveyancing/joint-tenancy-definition-292

"As a joint tenant you have an undivided share of the property"

vik2001
Posts: 61
Joined: Sat Nov 17, 2012 2:24 am

Re: Joint Tenants and Gifting AGAIN

Postby vik2001 » Thu Jan 23, 2020 10:16 pm

Yea i read that other day. To be honest it was confusing also.
Theres also this

https://www.wrighthassall.co.uk/knowledge/legal-articles/2017/04/05/retaining-interest-gifted-property/

https://www.google.com/url?sa=t&source=web&rct=j&url=http://taxbar.com/wp-content/uploads/2016/01/Giving_Away_Part_of_the_Family_Home_to_Avoid_IHT_Whilst_Continuing_to_Live_There_Patric.pdf&ved=2ahUKEwjewsOH0prnAhXDoVwKHZbhC8sQFjADegQIBhAD&usg=AOvVaw0ulmBrBBfGPTmHkHpjj4-z

someone
Posts: 396
Joined: Mon Feb 13, 2017 10:09 am

Re: Joint Tenants and Gifting AGAIN

Postby someone » Fri Jan 24, 2020 1:05 pm

One of my problems with property law is that there are two different ownerships.

The legal title is always owned as joint tenants.

The beneficial ownership can be JT or TiC.

But I never know whether any given bit of law is talking about legal or beneficial ownership.

Usually it doesn't matter but sometimes it could.

For example, the H&W jointly owned property form 17 stuff refers to property that is both legally and beneficially jointly owned (I believe) but doesn't apply when there is a single legal owner but joint beneficial interest.


s36 LoPA 1925 could be what you need. I think it says that joint tenants are to be treated as if they were beneficially entitled as TiC but without severing the JT.

My belief is that for IHT purposes there is no difference between JT and 50/50 TiC.

But I'm probably wrong :-)


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