If you buy a property with someone else, you need to decide whether you want to buy as joint tenants or as tenants in common. There are key differences between the two, particularly when it comes to the matter of survivorship.
If you buy a property as joint tenants, the assumption is that you each own an equal share of the property (unless you have told the Revenue otherwise). So, if there are two of you, each person owns 50% of the property.
When one owner dies, their share automatically passes to the surviving joint owner. For example, if you buy a property with your partner and he/she dies, their 50% share passes to you. You are then the sole owner of the entire property. This is known as the Rule of Survivorship.
The Rule of Survivorship overrides any other wishes you may have – including any wishes laid down in your Will. For instance, imagine Tom and Amy buy a house together as joint tenants. Amy has a son from a previous relationship and names him as her sole beneficiary. She writes a Will confirming this. She dies shortly afterwards. However, because she owns the property as joint tenants, it does not form part of her estate. Her share of the property therefore passes directly to Tom, rather than to her son.
Tenants in common
If you buy a property as tenants in common, then you can each own unequal shares of the property, if you want to. So, you might own the property 50/50. Or, one person’s share might be 75%, while the other person’s is 25%. It is entirely up to you.
When one owner dies, their share of the property forms part of their estate. It is not automatically inherited by the other co-owners, as it is with joint tenants. Instead, it is passed to the beneficiaries named in the deceased’s Will, or dealt with according to the rules of intestacy.
Using the above example, imagine Tom and Amy had purchased a property as tenants in common, rather than as joint tenants. Amy actually owned a 60% share of the property. After her death, this share formed part of her estate. Her Will stipulates that her son is her sole beneficiary, so now he owns 60% of the property, and Tom 40%.
Which option is right for me?
If you are buying a property with someone else, you need to decide which option is best for you – buying as joint tenants, or buying as tenants in common.
Typically, those in a relationship choose to buy a joint tenants. They feel comfortable with the idea that their share of the property will be inherited by their partner, if they die. However, unmarried couples buying a joint tenants need to be wary of the inheritance tax implications. Without the right planning, this could be very costly.
On the other hand, if you want someone other than the co-owner to inherit your share of the property, it is better to buy a tenants in common. This often applies to people who buy a property with friends or relatives. It is also useful for those who have children from a previous relationship, and want them to inherit their share of the property.
Contact us now
If you would like to discuss the matter with an expert, please contact us for professional legal advice. Each option has its own advantages and disadvantages. We can assess your situation and recommend the best approach in your individual circumstances. We are client focused and results driven.
Call us on 051 391 488 or email firstname.lastname@example.org for a no obligation enquiry.
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