Stamp Duty on Immovable Property (Freehold/Flying Freehold) on Death
Stamp duty payable on immovable property on death can be significant and requires careful consideration when estate planning. By way of example, stamp duty on a property with a value of £1,500,000 is £47,000.
Where a person dies intestate (without leaving a will) relating to their immovable property no stamp duty is payable and ownership transfers automatically to their heirs at law. Despite this it is advisable to make a will. Making a will which is registered in the Public Registry following your death provides certainty as to who owns the property and allows you to choose who inherits and in what shares.
Are there any stamp duty exemptions?
Most married couples and civil partners own their freehold property jointly for the survivor of them. In such cases ownership passes to the survivor on death and no stamp duty is payable regardless of the value of the property. Where the family home is owned by one of the couple and they leave it to the other by will, the transaction is exempt from stamp duty. However, if there is more than one property and there are children involved, the situation is not so straightforward.
In the event the last surviving parent leaves their immovable property to their children equally, again no stamp duty is payable. This arrangement may not always suit, particularly where a parent wishes to leave the property to one of their children.
When a will leaves immovable property to some or all of the children, but not in the proportions set out in the law on intestacy, or where identified properties are left to specific children, it is possible to obtain a concession on stamp duty from the Registrar of Deeds on a case by case basis. This usually results in some reduction on the stamp duty payable.
I am due to inherit immovable property. Can I reduce stamp duty?
Where you are due to inherit movable property (e.g. bank accounts, investments, share transfer property) it is possible to vary the terms of the will as part of an estate planning/tax saving initiative. It is not possible to vary a will relating to Jersey immovable property.
There are however other means of reducing stamp duty in these circumstances, for example by renouncing an inheritance and/or generation skipping.
Do Charities pay stamp duty?
An incorporated charity may inherit immovable property. Typically such charities will be an incorporated association registered under the Loi (1862) sur les teneures en fidécommis et l’incoporation d’association (as amended) or a limited company. Such charities are usually exempt from payment of stamp duty on registration of a will of immovable estate. Unincorporated charities may not receive Jersey immovable property.
Should I transfer ownership of my home to my children and retain a life interest?
Transferring ownership of your home to your children whilst you are living triggers full stamp duty. There are no exemptions.
Importantly, where an applicant for Long Term Care financial assistance has transferred ownership of their home to other family members at any time in the past, and has continued to live in the property by retaining a life enjoyment, the full value of the home will be included in their financial assessment for Long Term Care.
It is evident that stamp duty implications on death may result in potentially undesired outcomes for your loved ones. It is important to take professional advice on these matters. A little planning may result in significant savings.