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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15976
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Good morning Firstly I will outline the facts as known. My

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Good morning
Firstly I will outline the facts as known.
My mother-in-law transferred her property to my wife in 1995 (valued then at £50,000)
As my wife's health was failing in mid 2014 she then arranged for the property to be jointly held as tenants in common with her daughter. Sadly my wife passed away in late 2014, when I assume that full title of the property then passes to her daughter. The property is now valued at approximately £190,000. The daughters lawyer believes there could be a tax situation
Is there likely to be a tax liability regarding Inheritance Tax and could this arrangement in mid 2014 be classed as a 'Life Gift'


Did your wife leave a will? What was the value of her estate? Do you know what the value of the property was in mid-2014 and when she passed away in late 2014?

Customer: replied 2 years ago.

Yes my wife did leave a will, her estate was approx £35,000.

The value of the property when she passed away was approx £190,000


David Hammond


Leave this with me while I draft my answer.
I'm back.

Take a look here for information on property held as tenants in common and as joint tenants. As you will see, it is only where a property is held as joint tenants that it automatically passes to the surviving tenant when one of them dies. When your wife died she owned a share of the property as did her daughter. The wlll should stipulate what happens to your late wife's share of the property.

As your wife died within seven years of making a gift of a share of a property to her daughter, there are Inheritance Tax and Capital Gains Tax implications.

The value of the share of the property given away will be included in her estate as well as her own share. There will only be IHT to pay if her estate was worth more than £325,000 at the time of her death (possibly more than £325,000 if your wife was widowed before you married her). All gifts made in the seven years before her death would have to be included in that valuation.

The gift of a share of the property by your wife to her daughter in mid-2014 was a disposal for Capital Gains Tax purposes at the open market value. If the gift was a 50% share, for example, then the gain would be £70,000 (£190,000 / 2 - £50,000 / 2). The first £11,000 of the gain will be exempt so that leaves a taxable gain of £59,000 on which CGT will be charged at 18% or 28% or a combination of the two rates depending on the level of your wife's income in the period between 6 April 2014 and the date she passed away. There would be no CGT or less CGT to pay if the property was ever your late wife's main home during her ownership of it.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.


Many thanks for the reply, Referring to para.1, there was no mention in my late wife's will regarding her share of the property. She naturally assumed it would pass to her daughter. Does this affect the situation.

I am going out now - but will be in contact again later.

Kind regards

As the will did not mention the property held as tenants in common, you will need to consult the solicitor dealing with the estate of your late wife on that as I'm not an expert on deceased estate law.

It may be that the laws of intestacy apply if the will is deemed to be not valid. Those rules may only apply to that part of the estate that is not covered by the will. There is mention of a partial intestacy on page 16 here. Take a look here for the rules of intestacy. If the will is deemed to be valid, notwithstanding the fact that it does not deal with the property, it may be possible to execute a deed of variation within two years of your late wife's passing to include the property.

Customer: replied 2 years ago.


I was hoping that I could get more positive advice - do you have a colleague who could throw more light on the situation of deceased estate law in relation to my query given the fact that you are in possession of all facts

Can you tell me which part of your tax question I haven't answered. What do you mean by a "Life Gift"?

A lifetime gift made to an individual is a potentially exempt transfer for Inheritance Tax purposes. Where such a gift is made in the seven years before death, its value will form part of the deceased estate for IHT purposes. In your late wife's case, IHT would not appear to be an issue. Capital Gains Tax certainly is.

As I feel I've dealt with the tax issues arising from your question and the legal problem became apparent during our exchanges, you might consider posting a separate question in the UK property or family law section of just answer. There are very knowledgeable people there who will be able to deal with the issue of then property not being dealt with in the will.
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