Is it correct that even for assets held as joint tennants, the IHT200 will record the market value at DOD for the half share (assuming asset intended as half share etc) owned, and the survivor receives half of the asset at the DOD value for CGT purposes?
Client has very elegantly argued (after talking to a solicitor) that the asset not in the estate due to the surviroship rules, but I think that is just a question of where the asset passes to, not the tax situation. I pointed out we can include a marketability discount for the half share.
It is husband and wife asset, or was before the old boy corked it, which is a shame as he was a lovely fellow. Wife is a PITA.
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If the half share of the asset goes to the surviving spouse why is it an issue and why would spouse want a lower base cost?
Given the time maybe I am missing something obvious but really struggling to see an issue here.
You and the solicitor are both right.
It is in the IHT estate. It's not in the legal estate.
And take note of DJKL's point. And s161.
I think the 50% share of the ownership of the asset is in the legal estate. I'd imagine that the discount for having only 50% of the ownership and only owning 50% of the asset would not be dissimilar.
There is a distinction. Half the ownership does not pass to the executors to realise and distribute.
And, again, s161.
IHT does not operate by reference to what the executors realise and distribute. s 4(1).
S 161 is only relevant to my incidental valuation point, which I accept is not applicable in the OP's situation.
IHT does not operate by reference to what the executors realise and distribute. s 4(1).
I agree. As I said, it is in the IHT estate (s5).
It's in the estate, and the solicitor is an @r5e.
Tenants in common (assuming 50:50) means that you each own half of the asset.
Joint tenants (again assuming 50:50) is that you each have half of the ownership.
There is no difference (in terms of transfer of value) between transferring half of the asset and transferring half of the ownership.
IHT operates on transfers of value and, on death, treats everything (ownership and assets) to have been transferred (in the same way that they are subsequently transferred in consequence of the death) on the day immediately before death. It does not actually tax what is "in" the estate.
The transfer of value is the fall in value in a person's estate in consequence of the transfer. You have everything on day 1 and nothing on day 2; you value the everything, and apportion it between the places where it has gone. It's a mechanical exercise, and not a legal argument.
The solicitor's an @r5e. Please direct them her.
Confusion between assets passing by Will and "Estate" for IHT purposes.
A joint interest is part of the Estate even if it passes by survivorship.
Its IHT valuation may be less than a pro rata share of the whole-CTO will generally accept a 10% discount-but the survivor will have to use that discounted figure when calculating ultimate CGT on sale.of the inherited share.
A co-owned property owned as joint tenants passes by survivorship and does not go through the legal estate only, as has been stated, through the IHT estate.
The surviving co-owner is the surviving spouse so it passes to an exempt beneficiary (s.18 IHTA 1984) and therefore is not taxable on death.
For CGT there is an uplift to date of death value (s.62 TCGA 1992) but if the IHT was not ascertained by HMRC on the estate because the estate was not taxable the probate value is only a starting point for CGT and would need to be agreed. Given you sold the property within six months of death, you may find HMRC try to substitute the sale price as the probate value for IHT which would be good for you as it would increase the CGT base cost. If there is no IHT at stake then they probably won't so up to you to negotiate a higher CGT base cost if you can.
There is no discount for jointly owned property when the co-owners are married or civil partners - s.161 IHTA 1984 as has been said already.