Reducing inheritance tax

[landlord]

My girlfriend and I own a property together as tenants in common 80/20 in my favour. I am thinking of changing the ownership so that we are joint tenants equally (50/50). If I were to die first would my half share form part of my estate for inheritance tax purposes? I.e. would changing from 80/20 to 50/50 benefit my partner and children on my death in terms of inheritance tax?

 

[smeharg]

Firstly you need to be sure whether it's a tenancy-in-common or a joint tenancy. If it's a tenancy in common your share will form part of your estate on death. If it's a joint tenancy your share will automatically pass to your girlfriend on your death.

If you transfer part of your share now it will be deemed a disposal for capital gains tax purposes. The gain would be calculated using the market value of the share being transfered. Your girlfriend could also be liable to Capital Acquisitions Tax (gift tax).

Transfers of assets between spouses are exempt from capital gains tax and capital acquisitions tax, so getting married might be a worthwhile from a tax planning perspective. (Who said romance is dead!)