SDLT when buying out siblings inherited property

by Readers Question

10:59 AM, 28th September 2018
About 3 weeks ago

SDLT when buying out siblings inherited property

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SDLT when buying out siblings inherited property

My mother-in-law has passed away leaving her house worth about £360,000. There is an outstanding equity release loan probably in the region of £180,000.

She has no other cash/assets. She has left everything (so just house and about £1000 in cash) bar a small sum to each grandchild (25k to be taken out of house proceeds), to her three children.

My husband and I should like to take on the house getting another mortgage to pay off the equity loan so my daughter and her boyfriend can live there.

At the moment his two sisters are happy to gift their shares to him instead of him buying them out as they already have houses of their own (as do we) so would he still have to pay stamp duty on the 2/3rds that weren’t willed to him? I know he would obviously if he was buying them out.

Lastly if they did gift it but then one or both became resentful further down the line if their own circumstances changed we would probably have enough to recompense them as my own mother is looking to gift money to us to avoid IHT in about 5 years.

Thank you for any advice.

Clarisuk



Comments

Paul Shears

21:29 PM, 28th September 2018
About 3 weeks ago

I know of someone who had identical circumstances. The three adult children who inherited the property, which was beneath the inheritance tax threshold anyway, greatly under valued the property and one of the adult children bought the other two out at way under the true market rate. I would think this is perfectly legitimate but others may know better.
The sums of money involved were almost identical in terms of transfer value.
I would have thought that, if they had wished to, the "Sale" to the one adult child, could have been reduced to zero if they had chosen to.

Graham Bowcock

17:45 PM, 30th September 2018
About 2 weeks ago

Dear Clarisuk

There are so many variables in what you say that you really do need professional advice before doing anything. You mention, in particular, that one relative may seek to overturn the deal in future; even if you did not have this concern you would need to have a binding document with the value of the house clearly agreed. Your solicitor will need to make sure that there is no comeback and each party will probably be advised to get their own legal advice. This ensures that there is no coercion (perceived or otherwise).

Graham

Sue Twyford

12:06 PM, 1st October 2018
About 2 weeks ago

If all the beneficiaries agree then you should be able to facilitate the transfer of the other shares in the property through what is known as a Deed of Variation, but the key thing is to ensure that all the beneficiaries and the executors of the Will are in agreement. There is a time limit on implementing such changes, and conditions to be met in the process. There is no SDLT on inherited property (refer to Government website https://www.gov.uk/tax-property-money-shares-you-inherit/property)
As Graham says, you should seek legal advice before doing anything. Your solicitor should be able to help you through this process.


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