Stamp Duty - first time buyer, inherited 50% wish to buy out other party.

photoboy

We are currently living in the property, just got probate and we have not as yet been put on the deeds as co-owners, still to be transferred.

property is worth around 650 in the market I think the probate evaluation was a bit less.

Would like to buy out the other inheritor, and continue to live here.

What rate of stamp duty will I pay if I buy my sister out for 325 under these circumstances?
Is there a more efficient and legal way to do this?
ie. if I can get a mortgage and the other inheritor then gives up their share of the property, so that in probate, it is inherited only by me, would that change anything re tax etc?

hope someone out there has this expert knowledge...

da_rule

If you did it as a normal transfer where you both inherit jointly and the you pay her £325k to transfer her share to you, you would pay stamp duty at the normal rate. You wouldn’t be entitled to the first time buyer exemption as you would, at the stage of making the payment, already have an interest in the property.

Another option would be to do a deed of variation to the will. You could vary the will so that the entire house is left to you and therefore would be free of stamp duty. It would also be unlikely that the variation would alter the inheritance tax situation.

You could then agree to pay your sister the £325k for signing the variation. Obviously, unless you have the cash, this will mean that your sister will have to trust that you can get a mortgage for that amount and that you will pay her.

AnotherJoe

Is there £325k in the rest of the estate? If so a DoV would seem to do the trick, instead of splitting it 50/50, instead you get the whole house, sister gets £325k cash.

getmore4less

DOV does not get round there is consideration.

AnotherJoe

getmore4less wrote: »

DOV do not get round there is consideration.

Eh? Missing word?

Keep_pedalling

da_rule wrote: »

If you did it as a normal transfer where you both inherit jointly and the you pay her £325k to transfer her share to you, you would pay stamp duty at the normal rate. You wouldn’t be entitled to the first time buyer exemption as you would, at the stage of making the payment, already have an interest in the property.

Another option would be to do a deed of variation to the will. You could vary the will so that the entire house is left to you and therefore would be free of stamp duty. It would also be unlikely that the variation would alter the inheritance tax situation.

You could then agree to pay your sister the £325k for signing the variation. Obviously, unless you have the cash, this will mean that your sister will have to trust that you can get a mortgage for that amount and that you will pay her.

That sounds like tax evasion. A DoV where there are sufficient other assets to do an equal split with house going to one beneficiary is fine, but this suggestion could land you in a lot of trouble with HMRC.

The gift would also wipe out the OPs nil rate band for the next 7 years, which would lumber the OPs estate with an unnessesary 6 figure IHT bill should they meet with an untimely demise.

Tom99

I am sure if you employ a competent solicitor you can easily sort this out. In return for £325k cash the estate transfers the property to you.
I don't think there is any need for a DOV as such, since the £325k consideration would make the IHT/CGT clauses in a normal DOV invalid and since that is only that clause which is backdated to the date of death there would be no point.