Deeds and stamp duty

00ec25

markelanduk wrote: »

So would you suggest that I come off the deed and not have a charge against the property and trust that my siblings provide me with a third of the value of the property as and when it's sold?

you seem determined to commit tax fraud so it matters not what we say.

You cannot avoid higher rate SDLT if you expect to get money from the property

if you dispose of the property you may incur other taxes depending on the exact circumstances of your legal ownership

go pay a professional for advice you can sue them for if they get wrong

xylophone

*To avoid seeing myself and my siblings pay a large inheritance tax fee in the future, my parents sought a solicitor's advice and decided to transfer ownership of the property to myself and my two siblings.
*Although the property is in my and my siblings' name, we all appreciate that it's really my parents' inheritance for now. They are receiving rent from me and when I buy a property shortly, they will continue to rent it out. They may well decide to move into it one day.
*When my parents die, my siblings and I can then decide to sell the property and split it three ways. Until then, we all accept that any income generated from its rental should go to my parents.

Either your parents have transferred ownership to you and your siblings as an outright gift or they haven't.

If it is not an outright gift, then your parents have "reserved a benefit", and the gift is ineffective for IHT purposes.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm04071

https://www.kingsleynapley.co.uk/insights/blogs/private-client-law-blog/inheritance-tax-why-do-so-many-fall-into-the-gift-with-reservation-of-benefit-trap

Your parents are charging you rent and intend to charge rent to any succeeding occupier.

This must be declared to HMRC so it will be quite clear to HMRC when an estate return comes to be done that a benefit was reserved.

I think that you/your parents/your siblings need to take further advice .

xylophone

Another thought, even if the house is an outright gift but the parents can continue to obtain a benefit from it, there are the POAT rules to consider.

https://www.peplows.co.uk/factsheets/capital-taxes/inheritance-tax-avoidance-pre-owned-assets

HampshireH

Why don't you ask your parents to pay the additional stamp duty with the rent you have been paying them to live in your own house?

That way you keep the interest in the house/inheritance eventually. You can buy your own house.

steampowered

If you own the property, and then you buy another property, you have to pay additional rate stamp duty.

If your parents own the property, inheritance tax will be due when they die, if the value of their estate exceeds the IHT threshold.

You have to decide which of those two options applies. You can't "own" and "not own" the property at the same time.

Perhaps I am massively oversimplifying it but that sounds about right to me.

silvercar

I expect the "rent" that OP pays his parents is a more casual arrangement. If OP lost his job, his parents are hardly likely to make him homeless. The parents probably view the "rent" as an inter-family transfer of money and not something they consider formal income and taxable. I doubt the OP has a tenancy agreement or that the parents insure the building with landlord insurance etc.

markelanduk

This is exactly the arrangement silvercar.

Thanks all for your responses. I was just hoping that I could either permanently come off the register for the property and request a charge against it, or remove myself temporarily and then go back on it in a few years time when I'll able to afford the additional stamp duty. Like most things, it seems that life is not that simple.

I'll definitely be speaking to the solicitor who arranged the original transfer for my parents.

Yalpsmol

If 2/3 of you want to buy your own houses now, why not negotiate with the third sibling and just sell it and all get your own houses?

markelanduk

Because whilst our parents are still alive, they decide what happens to the property. They want to continue renting it out and may, one day, move in themselves.

SDLT_Geek

markelanduk wrote: »

I was just hoping that I could either .......................... or remove myself temporarily and then go back on it in a few years time .

This is a very bad idea. You need first to get to the bottom of who beneficially owns the property before you decide what to do. Half of what you say suggests that the property still belongs beneficially to your parents.