My late husband and I purchased a rental property as tenants in common. He passed away in 2015 without leaving a will. I had intended to transfer the complete property to my daughter. However as I have now discovered it was purchased as tenants in common, can I pass on his 50% share directly to her without paying CGT and would this count as a gift for IHT purposes. Or should I continue with my plans to transfer to my sole name and then to my daughter. Everything else was jointly owned and has passed to me by probate.
Hi Val and thanks so much for your question. I am so sorry you contact us regarding the passing of your late husband. Some interesting points in there. I am sure you are by now aware of the rules of intestacy, but if not, check out our article on that. So, first thing to think about is what is your entitlement under the rules of intestacy? This will not include any property held jointly (eg bank accounts) or houses held as joint tenants. There is a general rule of thumb that gifting half of a property to non occupiers is a dangerous thing as others may then have a right to force a sale (in very broad terms). This is generally NOT so critical for rental or second homes (obviously) as it is for the place you call home! As regards IHT, I am sure you are aware of the rules for PETs (potentially exempt transfers), but either way, check out our article on inheritance tax exemptions and reliefs. In short, if you are in good health, and survive 7 years after making a gift, IHT should fall away. Lastly, as regards CGT this will of course depend on what the answers are to the previous questions (in part at least). Lastly Val, if in doubt – PLEASE TAKE INDEPENDENT LEGAL ADVICE! Estate planning of this sort is frought with problems. The thoughts shared here are of a generic nature and should not be taken as specific advice! Ouch – we sound like lawyers don’t we?! Do get in touch directly Val if you would like bespoke help. And meantime – thank you once again for reaching out to QLAW!
