Why own Properties as Tenants in Common?

Owning a property in Northern Ireland as tenants in common allows for unequal ownership shares and control over how your portion of the property is distributed upon death.  This contrasts with joint tenancy where ownership is equal and automatically passes to the surviving owner(s).   Tenants in common can leave their share to specific beneficiaries in their Will, potentially avoiding inheritance tax implications and protecting their share for specific individuals, such as children from a previous relationship. 

Unequal ownership shares

Tenants in common can own property in unequal shares reflecting their individual contributions to the purchase price or mortgage. This is particularly useful for unmarried couples, friends, or business partners where contributions are not equal. 

How owning as tenants in common can help with inheritance planning

Avoiding sideways disinheritance:

If you have children from a previous relationship, owning as tenants in common allows you to leave your share of the property to them, rather than it automatically going to your current spouse who could then leave it to their own beneficiaries. 

Protecting your share of your property:

You can specify in your Will who inherits your share of the property, ensuring it goes to your chosen beneficiaries, not necessarily the surviving owner(s). 

You can also grant your spouse or partner a life interest in your share, allowing them to live in the property until their death or until they go into a care home, at which point your share passes to your designated beneficiaries. 

With care home fees in Northern Ireland currently in the region of £50,000 per annum, they can significantly diminish family wealth accumulated over a lifetime.  Having a Trust Will means that if you die before your partner, you can protect your tenant in common share of your property for your children.

Inheritance Tax planning:

In some cases, owning as tenants in common can offer tax advantages, particularly when combined with a Will Trust as it can potentially reduce the value of your estate for inheritance tax purposes. 

Other considerations for owning as tenants in common

• Transferring Your Share: You can sell or transfer your share of the property to someone else without needing the consent of the other co-owners.
• Mental Capacity: If one co-owner loses mental capacity, selling the property may require the registration of their Enduring Power of Attorney or if they don’t have an Enduring Power of Attorney, an Office of Care & Protection Controllership application. 
• Buy-to-let properties: Owning as tenants in common can be beneficial for unmarried couples who are investing in buy-to-let properties, allowing them to allocate income according to their ownership shares for tax purposes.
• Business partners: Owning as tenants in common can be a suitable arrangement for business partners buying property together, especially if they have different levels of investment. 

In essence, tenant in common ownership offers more control, flexibility, and personalised planning options for property ownership, particularly when it comes to inheritance and financial contributions. 

Find out more about Trust Wills here. If you have any questions or queries about Trust Wills, please contact a member of our Private Wealth team.