Buying house that you are a 50% beneficiary of?

Noneforit999

Hi

So my Wife and her sister are due to inherit 50% each of their grandparents house, probate is going through now.

The agreement is to split the house three ways cash wise once it sells between my wife, her sister and their Dad who would otherwise have inherited nothing. The wills were done years back when neither grandchild had a house etc so made more sense.

Anyway we may want to buy the house to live in once ours is sold.

Once probate is done, could we:

Buy the house at market value and use the proceeds of our house sale as the deposit which would be about £140k on a roughly £350k purchase price. Then take a mortgage for the remaining £210k

Then once the £350k comes through from the sale, split the proceeds in between the sisters and their dad?

If so, would we still pay stamp duty on the house?

Thanks 

getmore4less

If she inherits 50% then she only needs 50% to buy the house off the estate.
If the house is worth £350 that's £175k

If they want to give their dad 1/3 then she need to raise 2/3 £233.3...k

£140k from sale needs a mortgage ~£93k.

There will be costs and SDLT probably on £233k

Might be better to just go 50:50 

Then do gifts to dad for the cash reduced consideration for the property £175k lower SDLT.

Is a DOV being used?

canaldumidi

Noneforit999 said:

Hi

So my Wife and her sister are due to inherit 50% each of their grandparents house, probate is going through now.

The agreement is to split the house three ways cash wise once it sells between my wife, her sister and their Dad who would otherwise have inherited nothing. The wills were done years back when neither grandchild had a house etc so made more sense.

One option is a Deed of Variation to the will. A will can be changed/varied in this way,provided all the original Beneficiaries who would be affected by the change agree. The house could then be left to the three of them.

It is worth noting (won't help you now but others might take note) that it's usually best not to leave a named property in a will. People sell their properties, and each time that happens the will has to be updated. Other factors can alo change between writing the will and death (as here). Far better to simply include it as one of the assets of the Estate to be left in whatever proportion to however many Beneficiaries. The Executor can then distribute the assets including the property in the vbest way.

Anyway we may want to buy the house to live in once ours is sold.

So you/your wife will need to pay the Estate 50% of the Probate value of the property. You'll then receive 100% of the property from the Estate. The Executors of the Estate will then distribute the remainder of the Estate (any savings, investments, money raised by selling the yacht etc) including the money you've paid into the Estate, according to the will. If the will has been varied by a Deed, then the Executors would distribute according to that Deed.

Once probate is done, could we:

Buy the house at market value

No. The price you pay should be the Probate value used by the Executers to obtain Probate, unless a meaningful period of time has passed between the death and the date of sale, and a meaningful change in market value has arisen.

and use the proceeds of our house sale as the deposit which would be about £140k on a roughly £350k purchase price. Then take a mortgage for the remaining £210k

You can certainly use the sale of your current property combined with a mortgage to pay for the 50% purchase. Both your sale, and mortgage application, are likely to delay your purchase, and thus delay distribution of the Estate, which is no problem other than my point above regarding price.

Note that if you pay a market price signficantly above the probate value, the Estate may have to pay Capital Gains Tax on the gain the Estate makes.

Then once the £350k comes through from the sale, split the proceeds in between the sisters and their dad?

Once you have paid the Estate and the Executers distribute the remainder of the assets (including your payment intothe Estate, either

1) the Executers could pay your dad his share if a Deed of Variation has been used giving your dad a share, or

2) your wife and sister could simply give your dad gifts of whatever amount you wish/agree

If so, would we still pay stamp duty on the house?

SDLT would be due on the amount you pay the Estate.

Who are the Executers, and how much familiarity do they have with the role? If there is no solicitor acting as Executer/joint Executer, then it may be wise to use one to draw up any DOV, and or to advise on an adhoc basis. The costs for this would come from the Estate, as would any running costs for the property between the date of death and the date the property is sold/distributed. The Executers will need to be keeping good records of these costs(insurance, council tax, utilities etc, as they reduce the value of the Estate,

Noneforit999

Thanks both for replies.

Her Dad is executor of the wills (grandad and gran) and has a solicitor doing the probate part.

He is trying to make things as easy as possible so it sounds like the easiest thing to do would be to continue as we are now and just allow the house to be split 50% each to my wife and her sister.

Our house will complete in a few months and we will just move into her Granparents house whilst we look to buy her sister out so we will pay all the bills etc during that time.

We then get a £175k mortgage and use her £175k as the deposit so a 50% LTV.

Once the house sells, we add £60k ish from the proceeds of our house to the £175k from the house sale and this then get split between her sister and her dad which equates so around a third each.