How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • Go back-and-forth until satisfied
    Rate the answer you receive.
Ask Sam Your Own Question
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 16908
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
16196420
Type Your Tax Question Here...
Sam is online now

An investment property is owned as Joint Tenants by a

Customer Question

An investment property is owned as Joint Tenants by a married couple. The couple divorce but the property remains as Joint Tenants to avoid CGT being incurred at the point of changing from Joint ownership to Sole ownership of one of divorcing couple.
One of the joint tenants dies.
I believe the surviving tenant would "own" the property (assuming no mortgage).
Would CGT be incurred for the survivor after the death of the "first" Joint Tenant, now they are no longer Spouses?
If the survivor donated the property to the estate of the "first" Joint Tenant would CGT be payable from the estate of the "first" Joint Tenant?
Could the property be put in Trust to benefit the "first" Joint Tenant`s dependants?
Submitted: 18 days ago.
Category: Tax
Expert:  Sam replied 18 days ago.
Hi

I am Sam and I am one of the UK Tax experts here on Just Answer

The fact you are joint tenants changes nothing as you are no longer a married couple so any transfer other that in the years of marriage of the tax year of separation remains tax free from capital gains if the will states that the same terms agree as its a challenging point for any new relationship or any children to challenge as you are no longer married and no longer should have not have remained joint tenants with a severance of this status needing to have taken place

So as the passing of one spouse then took place their share must be taken into account within their consideration for Inheritance tax and then capital gains arises just on the surviving spouse 50% share to the date of inheritance adn 100% share from this date

Thanks

Sam

Customer: replied 18 days ago.
Unfortunately, your answer is difficult for me to be sure I understand correctly. It seems punctuation is lacking for clarity.
I believe that whilst the properties remain as Joint Tenants no CGT results, nor if converted to Tenants in Common at 50:50 shares.
I believe your answer indicates that on the first death CGT would be incurred for the survivor (despite each party having previously jointly owned the property) if the death occurred later than the Tax Year of the couple separating.
Please confirm the above is so.
Unfortunately, your final comment, as copied - "So as the passing of one spouse then took place their share must be taken into account within their consideration for Inheritance tax and then capital gains arises just on the surviving spouse 50% share to the date of inheritance adn 100% share from this date" - is not clear to me.
Please try to clarify the meaning.
Many thanks.
Expert:  Sam replied 17 days ago.

Hi

Hope this streamlines clarification

1. when you divorced you could not leave this recognised as a Joint tenants you had to either sell, transfer to the other party or  have it treated as tenants in common 50:50

2. The first death then it would have been considered for Inheritance tax as being left to someone other than the legal spouse (the 50% share as hey are now tenants in common)

3. Then as that 50% left to the surviving spouse then then own 100% from that date

Thanks

Sam