Transfer of inherited house with charge for care bill

ernie-money

I'm not sure if this is the best place to post this, but hoping for some advice...
My partners mum passed away about a year ago. She owned a house in her own name (no mortgage) but ended up going in to a care home and accrued a substantial care bill (roughly 60-65k) for which the council placed a charge on the house.
The house was left to my partner and his brother, and they have decided to keep the house between them, to possibly rent it out, rather than selling & getting the money.
To do this, they have had to find the money to pay off the care bill, and they have managed to beg/borrow/steal (not literally!) enough to cover the amount needed.
The problem is inclarity regarding new stamp duty laws (the house was valued at (170k) and I have received a long email from the solicitor, which I will paste (sections of) into the first comment, in the hope that someone will have an idea of whether to just swallow the extra cost, or if there is another way...

ernie-money

Section from letter from solicitor with names removed:
Having reviewed the correspondence and researched it further regarding the transfer of the property, Devon County Council (DCC)’s debt and the potential Stamp Duty Land Tax (SDLT) position I now have clarity as to what the rules are but it remains unclear if the specific facts here would fit within them. In order for SDLT not to be paid "they"would have to take the property subject to the full outstanding amount to DCC and then repay this themselves (so I would have to forward them funds from the estate to do so). This was my concern over paying some of the charge amount off and if this had been done SDLT would definitely have been payable without possibility of exploring otherwise.

The problem here is that DCC are suggesting they would not agree to the transfer subject to the charge as currently the property cannot be dealt with unless the charge is redeemed or they consent to the transfer subject to the charge. Their position is why would they agree to this when they can just be repaid and as soon as we need to deal with the property. As frustrating as this is I can see their point and there is no way around this that we can find which would not potentially amount to tax avoidance carrying a risk for "them" and the executors which even if "they" were willing to accept the executors as solicitors cannot.

It may be possible to find a way around regarding the above or take advice from a barrister but I would suggest this could hold things up further and increase costs beyond the actual SDLT bill. As such there are only really two options which could allow the estate to be finalised promptly. These are either:
Back track and place the property on the open market and hope it sells quickly (which would not be what they want); or
The only other option that "they" would pay into the estate the amounts around what was discussed; the funds being used to pay DCC. With this option they may also have to fund in the region of £1,200 - 1,500 worth of SDLT between them but is the quickest way to finalise things.

ernie-money

The issue with this matter dragging on, is that the care bill is accruing interest, so the amount outstanding is just increasing, the longer this goes on. Hence wondering whether to just "bite the bullet" and pay the extra money, but it's still more money to have to find, which really isn't there at the moment...
Not sure if this should've been on the "reducing tax" forum, rather than here, but I thought I'd start here anyway, would be very grateful for any input!

Pixie5740

Are the able to pay the money into the estate? I know they've got the money but are they allowed to pay money into their mother's estate.

Personally I think they should re-think and sell the property. Do either of them have any experience of being a landlord? Is this property a good property to let? Would it generate a good rental yield? Are they emotionally attached to the property?

AdrianC

Pixie5740 wrote: »

Are they emotionally attached to the property?

The very fact that they don't want to sell this property because it was their mother's says that they are - and that's a terrible start for a rental...

getmore4less

IT is not clear to me why paying off the charge is a SDLT event?

You don't pay SDLT when you pay off a mortgage.

Transferring a house to beneficiaries does not trigger a SDLT event.

.............
Might be that as the estate can't fund the debt directly it means that the transfer does become a transaction with consideration(debt being paid off) and it will be hard to break that link.

The tax board might be a better place to ask about this.

http://forums.moneysavingexpert.com/forumdisplay.php?f=22

booksurr

I doubt anyone on here will provide an answer which will be more authoritative than the legal opinion you are paying for, since by definition no one would be foolish enough to express a legal opinion on a forum

Cakeguts

Sell the house pay the charge and then buy one that is suitable for letting. Something that you buy to live in yourself may not be the best house to let.

sheramber

https://www.gov.uk/stamp-duty-land-tax/overview

You pay the tax when you:

buy a freehold property
buy a new or existing leasehold
buy a property through a shared ownership scheme
are transferred land or property in exchange for payment, eg you take on a mortgage or buy a share in a house


I think the situation might be covered by the last bullet point as the transfer is in exchange for paying off the care home fees.