Buying/Selling an inherited house

Jibergurt

I'm hoping this is the best forum for some information, I have hunted for the info on the web but the only stuff I have found doesn't seem to answer the question or I don't understand it  
OK, I will, eventually, inherit half a house with my sister. I already own a quarter of it after the death of one parent. The question is:
If the house is worth 400k and I decide to buy out my sister how does the stamp duty work? We are considering selling our house (worth about 275k) and buying her out with the proceeds but I can't find out how it would work stamp duty wise as I would be buying only 200ks worth of house as I would already own half of it. Can anyone explain in words of one syllable please?

theartfullodger

Whoever you think is going to leave you 50% of the house could change their mind, get married, use all the value in care home fees.

Plus Rishi might change IHT rules to tax you a lot on any inheritance.

So my 'umble advice, not asked for, is carry on living, hope Covid-19 don't get you, be helpful and caring for whoever you are speculating may leave something to you, carry on working hard and make some money, then wait and see what happens.

Eggs and chickens, counting thereof.

Mickey666

Well yes, or we could assume the OP already understands all that so we could just try to answer their question

My understanding is that SDLT is payable on the AMOUNT of the transaction, regardless of the proportion of the property to which it applies.  Thus, in this case, the property transaction would be £200k so the SDLT payable would be based on that figure.  There are other considerations as well, such as if you already own a property or if you're a FTB, but that's the basic answer I think.

To calculate the actual amount of SDLT payable, use the government calculator here: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

oldbikebloke

Jibergurt said:

 Can anyone explain in words of one syllable please?

SDLT liability is based on the chargeable consideration paid 
chargeable consideration = the cash paid 
pay sister 200k in cash, nothing else = SDLT on 200
SDLTM03700 - Stamp Duty Land Tax Manual - HMRC internal manual - GOV.UK (www.gov.uk)

the question you have not asked is; what rate and when?
this will be an inherited property 
i assume you already own a property yourself (NOT rent one)
so, provided you buy her out within 3 years of date of death the standard rate applies
take longer than that, and the higher rate would apply 

SDLT_Geek

oldbikebloke said:

Jibergurt said:

 Can anyone explain in words of one syllable please?

SDLT liability is based on the chargeable consideration paid 
chargeable consideration = the cash paid 
pay sister 200k in cash, nothing else = SDLT on 200
SDLTM03700 - Stamp Duty Land Tax Manual - HMRC internal manual - GOV.UK (www.gov.uk)

the question you have not asked is; what rate and when?
this will be an inherited property 
i assume you already own a property yourself (NOT rent one)
so, provided you buy her out within 3 years of date of death the standard rate applies
take longer than that, and the higher rate would apply 

I agree with most of the above, but not the last bit about the “within three years of inheritance” rule.  That rule is about whether a share in an inherited property “counts against” you when buying another property.

oldbikebloke is right to highlight the rate of SDLT.  OP mentions perhaps selling the existing home.  Depending on the details, that might mean that standard rates of SDLT apply, without the extra 3%.

greatcrested

SDLT is based on £200K - the 'consideration' paid.

You currently own a property,soif you buy out sister without selling current property, this willbe an additionalpropety,so the extra 3% willapply.

If you then later sell the existing propery within 3 years, you can claim back the additional 3%.

If you sell the existing property before buying out sister (or simultaneous), then the additional 3% will not apply.

All assuming no changes to the current rules.

getmore4less

45002 said:

Jibergurt said:

I'm hoping this is the best forum for some information, I have hunted for the info on the web but the only stuff I have found doesn't seem to answer the question or I don't understand it  
OK, I will, eventually, inherit half a house with my sister. I already own a quarter of it after the death of one parent. The question is:
If the house is worth 400k and I decide to buy out my sister how does the stamp duty work? We are considering selling our house (worth about 275k) and buying her out with the proceeds but I can't find out how it would work stamp duty wise as I would be buying only 200ks worth of house as I would already own half of it. Can anyone explain in words of one syllable please?

Anyone still living there ?

https://forums.moneysavingexpert.com/discussion/6191327/iht-and-tenants-in-common

usually a bit of life interest in these situations might not own a 1/4..