Stamp Duty on inherited property and future tax when selling

sassyblue

Hi all,

I’m taking on my fathers property after his death and I’m having to raise a mortgage to pay off my sister for share of the inherited property.

I asked the mortgage lender if he could put the property in mine and my husband's name going forward but he thinks my husband will have to pay some stamp duty as for him he'll be potentially purchasing the property because he didn’t technically inherit a share.  Is this correct?

second question…. We're fine if hubby's name can’t go on the property, we have mirror wills so if anything should happen he will inherit it BUT would it be better if his name did go on it now if it saves further tax like CGT when we sell it? 

Thanks in advance, you've all been so helpful helping me navigate probate etc. 

Grumpy_chap

Sorry to hear of your loss.

As I understand it, you have only inherited 50% of your father's property.  Whoever buys the other 50% from your sister will be liable for SDLT on that amount (including potentially the 3% second property surcharge).  This includes if you buy your sister out, and is explained in the following article:
https://www.webuyanyhome.com/stamp-duty-on-inherited-property/
"it’s not unusual for one sibling to buy another sibling’s share of an inherited home, if this is more than the threshold of £125,000 you will have to pay stamp duty"

On that basis, you could continue to own the 50% you inherited (no SDLT) and your husband could buy the second 50% from your sister with no impact to stamp duty, but achieving the joint ownership that you desire.

[Deleted User]

Second question - Yes it would as you would each benefit from the tax free exemption of 12300 and any unused lower rate bands.

As has been exhaustively mentioned before on these forums, do this well before there is any clear intention to sell so that it appears less likely that the transfer into joint names was not done solely to avoid tax.

sassyblue

brilliant thank you both. A solicitor will handle it all so I expect to get a bit of advice but wanted to know the best route to go down first, I know their tax advisor who they could refer me to, lovely man but he’d hold it up a month waiting for answers, he’s already over retirement age but has never been fast! 

sheramber

Grumpy_chap said:

Sorry to hear of your loss.

As I understand it, you have only inherited 50% of your father's property.  Whoever buys the other 50% from your sister will be liable for SDLT on that amount (including potentially the 3% second property surcharge).  This includes if you buy your sister out, and is explained in the following article:
https://www.webuyanyhome.com/stamp-duty-on-inherited-property/
"it’s not unusual for one sibling to buy another sibling’s share of an inherited home, if this is more than the threshold of £125,000 you will have to pay stamp duty"

On that basis, you could continue to own the 50% you inherited (no SDLT) and your husband could buy the second 50% from your sister with no impact to stamp duty, but achieving the joint ownership that you desire.

Whoever buys the other 50% from your sister will be liable for SDLT on that amount (including potentially the 3% second property surcharge). 

 and your husband could buy the second 50% from your sister with no impact to stamp duty, 

Is that not a contradiction. Why would the husband not be liable to pay stamp duty and second home surcharge ( assuming he is joint owner of existing property) /

Grumpy_chap

sheramber said:

Whoever buys the other 50% from your sister will be liable for SDLT on that amount (including potentially the 3% second property surcharge). 

 and your husband could buy the second 50% from your sister with no impact to stamp duty, 

Is that not a contradiction. Why would the husband not be liable to pay stamp duty and second home surcharge ( assuming he is joint owner of existing property) /

Thanks - not a contradiction, but I do see how you have read what I wrote and understood something different from what was intended.

Whoever buys the 50% of the property will be liable for SDLT (and second property surcharge if applicable).
I've assumed (like you) that OP and OP's husband are both joint owners of their primary residence.
So, if the OP buys the second 50%, there is a certain SDLT liability that arises
If the OP's husband buys the second 50%, there is the same SDLT liability that arises.
So, by writing above "husband could buy the second 50% with no impact to stamp duty" I meant that the SDLT liability is the same whether the OP buys or the OP's husband buys, so there is no impact to stamp duty (as in "no change") not there is no impact (as in none arising).
I understand the possible confusion and hope that this clarifies the meaning and makes the thread clearer for all.

The benefit of split ownership will be reduction in potential CGT, as PurdyOaten confirmed.