IHT38 Joitn Property

Trusts Discussion
1

Am I correct in thinking that Joint Ownership Discount automatcially gets cancelled if you apply for a Loss on Sale using form IHT38?

Martyn Dixon
Harold Bell Infields & Co

2

In effect, yes, as s.191(1) IHTA 1984 requires the sale value to be included on the IHT38 claim.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

3

Continuing with this thread, the position is, the IHT400 was submitted reflecting the deceased’s interest in the property as £207,000 (he owned 1/3rd), less 15% discount for joint ownership property, as (rightly or wrongly), the property is jointly held with his late wife, whose Will left him a life interest in the property and thereafter to her beneficiaries.

I also included the wife’s 2/3rds in the IHT18, valued at £414,000, less the 15% joint ownership discount.

HMRC appear to have accepted the position.

I do not now wish to claim loss on sale for the deceased share (now worth £185,000), as the loss of the joint ownership discount is more than the decrease in value. However, it does seem to me I can state in the C4 Corrective Account that the Interest in the trust element has reduced from £414,000 to £370,000, but I do not want to unnecessarily rock the boat, or claim somehting which I am not able to claim.

Has anyone else experienced a similar dilemma?

Martyn Dixon
Harold Bell Infields & Co

4

Forgive me for following his up, but I just wondered if anyone had any views on how best to approach this?

Martyn Dixon
Harold Bell Infields & Co

5

My view is that the claims for loss on sale of land by the trustees is separate to the one by the executors so i can see no reason why one cannot be done without the other.

I cant quite see the logic in the first sentence of your 4th Para but also i think your starting position is flawed (even though HMRC has accepted it) as there should be no discount for the joint ownership in either as the property as a whole is in the deceased’s estate for IHT purposes.

I don’t see how substituting £185k for £207k (assuming £207k is after the discount so value for the whole would be £690k) puts you in a worse position unless i am missing something very obvious

6

I’m confused as to a discussion on valuation discounts where the land was held partly by the deceased and in which the deceased also had a life interest as provided under the spouse’s earlier death.

Malcolm Finney

7
  1. How can there be any discount when the deceased owned or is deemed to have owned interests that add up to 100%?
  2. In a case where the deceased owned or is deemed to have owned less than 100% then any discount is a matter for the valuer and not for executors to apply. For example if the deceased owned a 50% interest in Blackacre, the executors should instruct the valuer to value a 50% interest in Blackacre. They shouldn’t ask for a valuation of the entirety and then for the executors to take somewhere (usually) between 42.5% and 45% of that valuation as the PV. Also a discount is not always appropriate.