Inheritance Tax discounts for jointly-owned property

If you own property with someone else, when you die you can claim a reduction in the value of your share for Inheritance Tax purposes.

This is known as a "Co-Owner Discount". It does not matter if you own the property as joint tenants or tenants-in-common, the discount is the same.

However, it does not apply to married people, who benefit from a spousal exemption anyway.

Jack and Jill own a house worth £800,000. They are an unmarried couple. Jack dies and leaves his half share of £400,000 to Jill. For inheritance tax purposes, his £400,000 share reduces to £340,000 as a 15% discount can be applied.

On Jill's death, as she would now have owned the whole house, there is no further discount.

Had Jack left his half-share to a discretionary trust, then a 15% discount would have been available on first death and then on Jill's death, a further 10-15% discount could also be applied to her share.

Married couples should not feel too aggrieved as, unlike unmarried couples, they can transfer the unused NRB and RNRB allowances of their spouse. which can save up to £200,000 in IHT.

IF YOU ARE AN UNMARRIED COUPLE AND WANT TO INCLUDE A DISCRETIONARY TRUST IN YOUR WILL TO BENEFIT TWICE FROM THE CO-OWNER DISCOUNT, GIVE US A CALL.

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