Joint ownership / Co-ownership Contracts

[2cracks]

Myself and my partner are buying a house together. We have a choice of 2 contracts to sign...
1) if either of us die, the house goes to the other
2) if either of us die, the house goes to our next-of-kin unless otherwise stated in a will


I want the house to go to my partner if i die (we have no children), so should i pick option 1?, or pick option 2 and write a will?

Is there any particular reason to chose one over the other?

 

[Vanilla]

Sounds like joint tenancy versus tenancy in common. If you want your partner to inherit automatically in the event of your death you should go for joint tenancy- which is your option 1. If you go for option 2 and make a will your partner would have to take out a grant of probate to your estate and have the property transmitted into his name which is costly. With option 1 he only has to produce a copy of your death certificate to the Property Registration authority to have it put into his sole name. Remember that if you have children you should always make a will if you have any assets in sole names. Also there are tax issues on death where you are not married.

 

[2cracks]

Ooh, tax issues. I hate hearing that. So we should get married before I die? Sounds ok to me. Ha. Dont suppose you could briefly outline what these tax issues would be?
Many thanks

 

[Vanilla]

No inheritance between spouses.

However cohabitees who are not married are at present deemed to be strangers for inheritance tax purposes, therefore can inherit only around 24000 before tax. Anything above this ( and I have to assume that half the value of your house is more than this) is taxed at 20%.

Plans are afoot to change this discriminatory law but as for now that is the situation.

Just get married...

 

[Dreamerb]

Option 1 is definitely your best bet here - you won't have tax liabilities, unlike the case in option 2 where there may be some capital acquisitions (?) tax liability. It's a good idea to make a will anyway. And don't forget to arrange for more mundane eventualities - what if you break up? Who gets the house, do you automatically sell up, etc.

 

[Vanilla]

There is inheritance tax regardless of option one or two in this case while you remain unmarried.

 

[2cracks]

thanks for the advice

 

[Dreamerb]

There is inheritance tax regardless of option one or two in this case while you remain unmarried.

Really? Sorry, hadn't realised that - thought I'd been told so, in fact. Just as well we got married then!

Apologies to OP.

 

[Dreamerb]

There is inheritance tax regardless of option one or two in this case while you remain unmarried.

Unless... there's the exemption under the Capital Acquisitions Tax Consolidation Act 2003 [http://www.irishstatutebook.ie/ZZA1Y2003S86.html].

But I wouldn't like to be relying on it.