Beneficial Joint Tenants - IHT, CGT

[BoltonStreet]

Property held jointly (beneficial joint tenants); not married. One of the two dies. What tax is payable by the survivor if she subsequently sells the property?

[AGoodman]

If it has always been her main residence then probably none.

If not, then potentially capital gains tax charged on the gain. This is (loosely) sale price - (1/2 purchase price + 1/2 market value on death of partner).

I'm assuming IHT either wasn't an issue on death or has been paid. If being paid in instalments, a sale would trigger the need to pay remaining instalments.

[BoltonStreet]

Thank you ... in the Will, refers to leaving share of property free of tax. The property is no longer the main residence of the survivor (not married).

If the share of the property is included in the value of the estate, then IHT is presumably payable as share of property + investments exceed the £325k threshold?

[AGoodman]

IHT may be payable as a result of the death, but that will be independent of whether the property is sold or not.

IHT may be payable but if the property is given "free of tax", the tax would be paid from the residue. You refer to the property being owned as beneficial joint tenants. In that case you wouldn't expect a legacy of his share as it passes automatically outside of the will (as opposed to beneficial tenants in common). However, it is still common to see a reference to the property share not bearing its IHT, which may be what you mean.

Either way, the base cost of that 50% share for CGT will have been uplifted to the market value at death.

The tax on the remaining half share, always held by the seller, will be as I said below but the gain will be reduced proportionately for any time it was her main residence and potentially by e.g. lettings relief.

[BoltonStreet]

Thank you - but does the deceased’s share form part of the estate for IHT purposes?

[AGoodman]

For IHT purposes - always.

For succession purposes, only if tenants in common (so apparently not here).