inherited property and stamp duty

NationalElfService

Not done my first tax return as yet, I started receiving income at the end of last tax year. So will be filling it out this tax year. I'm on a relatively modest salary so I don't think the tax bill should be huge.

Mojisola

NationalElfService wrote: »

I was recently lucky enough to have inherited a property

NationalElfService wrote: »

Sorry I think I phrased things confusingly.

I was gifted a property, that is subject to the 7 year rule. So IHT may be subject, if my parents pass away in that period (shudder).

A gift is quite different to an inheritance!

I did wonder about the 'lucky enough' comment. Most people are grateful about an inheritance but sad at the circumstances.

HouseBuyer77

Beware of deprivation of assets too: http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/

I don't think the 7 year rule applies to that. However not an area I understand (beyond knowing it exists and needs consideration). So maybe won't be an issue in your case. Other posters may have more detailed advice. In the mean time that link has lots of information to read through.

45002

NationalElfService wrote:

Good points thank you! My main concern was paying capital gains tax and/or inheritance tax (should the worst happen).

P.S They really are a very lovely family though, if I can help it I'd like to ensure they stay where they are.

Hello NationalElfService

Just out of interest who long have the tenants been living there, date they 1st moved in ?


.

NationalElfService

11 years or so.

AnotherJoe

Have your parents paid the CGT on the increase in the value of the house over the past 11 years ? Or do they expect you to pay that to them? Or is it a "double gift" in effect?

theartfullodger

NationalElfService wrote: »

Hi all,

I was recently lucky enough to have inherited a property that my parents had rented out to a lovely family in Hampshire (which I continue to rent out to the same family). .....................

Lucky you, congratulations!

Presumably you've served tenants with s48 & s3 notices?? s48 so rent is due (yes ! - if not they don't have to pay..) and s3: S3 is the one needed to avoid fines & a criminal offence. Check with whoever handled the land registry transfer... or your own records...

Funny how many people seem unaware of s3...
http://www.legislation.gov.uk/ukpga/1985/70/section/3

xylophone

You haven't inherited a property, you have been gifted it.

Have your parents checked the CGT situation as it relates to them?

You are not living in the property but have been receiving income since March/April?

Was any income received in the tax year 2016-17?

If you keep this property, then you will be expected to pay the additional SDLT on the purchase of your home.

G_M

NationalElfService wrote: »

Sorry I think I phrased things confusingly.

I was gifted a property, that is subject to the 7 year rule. So IHT may be subject, if my parents pass away in that period (shudder).

But this liability would not be yours. The peoperty was gifted to you. You now own it. There is no Inheritance Tax laibility on you if the donor dies within 7 years.

It is the estate of the deceased that has to pay IT. The 7 year rule simply means that when the Execuors calculate the total value of the Estate for IT purposes, they must include the value of any gifts made by the deceased in the last 7 years. The Executor may therefore have to pay more IT than would be the case if the deceased had survived 7 years.

Pixie5740

Don't let the tail wag the dog. You've been given a property free, gratis surely that outweighs having to pay the higher rate of SDLT. I'm assuming that the property you've been given is unencumbered so that's a huge source of money you could unlock in order to buy your own place.

Ideally your parents would have gifted you the property after you'd bought your own home but c'est la vie.