Last updated on December 29th, 2020 at 02:10 pm
The way in which you purchase a property can affect various issues, including:
- Inheritance Tax
- Capital Gains Tax
- Couples who separate
- People who pool resources to buy property together
How can property be bought jointly?
There are 2 ways in which property can be owned in more than one name. These are:
- The property is owned in equal shares by the owners, irrespective of how much they have contributed to the sale
- If the property is sold, the proceeds are shared equally between the owners
- If an owner dies, his/her share passes automatically to the other co-owner(s) and this is unaffected by any will the deceased may have left
Joint tenancy, therefore, might not be appropriate for some second marriages or relationships as the property will automatically pass to the surviving co-owner and not to someone else, even if that is what the deceased had specified in their will , i.e. children from a previous marriage. It is also not usually appropriate for business associates or unrelated persons such as first time buyers who are pooling their resources to get on the property ladder.
It may be more appropriate for a couple in a first marriage who may be making equal contributions to purchasing a property that is not part of inheritance tax planning.
Tenants in Common
- Owners can own whatever percentage of the property they wish. Shares don’t have to be equal
- The percentage owned by each person can fairly represent the contribution they made to the purchase
- The exact share each person owns can be specified in writing which can help to reduce future conflict; a deed of trust
- If an owner dies, they can leave their share of the property to someone in their wWill. It will not automatically pass to the co-owners.
Owning a property as tenants in common can be more flexible and might be a more appropriate method of ownership for people marrying for the second time as it allows them to leave their share of the property to children from a previous marriage, for example.
It can also be useful for unmarried couples, or those with contributions from parents, as each person’s exact share can be specified.
Married couples can use their share of the property for Inheritance Tax planning (IHT) purposes. Please see our pages on IHT.
A possible disadvantage of owning property in this way is that if a co-owner dies, the surviving co-owner can’t sell the property and has to appoint another trustee to act in the sale. A grant of representation may also be required (where it would otherwise not be required) in a deceased co-owner’s estate.
Our property team has lots of experience of helping individuals and couples to work out the best way to own a property. Contact us now for further information or to make an appointment.
How can Graysons help?
Contact our property experts to discuss the way in which you own your home and if it is appropriate for your needs. If you need to change the way you own your home, our Sheffield Solicitors can give you a competitive quotation to carry out the work for you.
Don’t forget that Graysons is accredited with the Law Society’s Conveyancing Quality standard, so you can rest assured that our expertise and quality of service is second to none.