Thursday 6th February 2020
As property costs soar, more people are viewing co-ownership with a sibling as an affordable way to get on the housing ladder and move away from mum and dad, than buying alone. This may well be a short-term solution for most of these as one or both siblings may move away for work or find a long-term partner with whom to settle down and start a family. However, for some siblings, such an arrangement may end up becoming permanent. Additionally, some siblings could end up living together later in life following the death of partners for example.
Unfortunately, as things stand, on the death of the first sibling, there are no inheritance tax exemptions meaning that the surviving sibling could well have to sell the home they have shared in order to pay the IHT bill. This means that not only does the survivor have to cope with the grief from losing their sibling but also they face having to move from the home which they may have lived in for a number of years, compounding the stress and upset which they already feel.
The possibility of a ‘sibling exemption’ has been mooted for a while and now a new bill has been introduced which would enable property to pass free of inheritance between siblings who are over the age of 30 and have lived together for more than seven years. This will be welcome news for those who currently face the possibility of a large IHT bill, although some critics argue that the bill does not go far enough and should offer protection to others who may live together in a non-romantic way, such as friends. Others argue that any change in the law could be open to abuse.
There is still some way to go before the bill becomes law but CLT will ensure you’re up to date with any legislative changes, through our popular Wills and Probate Update course.
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