Stamp duty land tax liability with inherited house

Francis63

I own my house and am selling it. 

My father has passed away and his estate (including his house) is left in his will to myself and 3 siblings in a trust. Only my eldest sister and I are executors and the two surviving beneficiaries of the trust (mum and dad were the other two - now both deceased). Their wishes were for the estate to be divided equally between all four siblings. 

We have probate for both mum & dad and are considering selling their house now. 

We were advised not to do the assent if selling straight away. 

The estate is below any inheritance tax liability.

If I were to buy it (or have it transferred to me) paying out my other three siblings what would be the SDLT implications (if any) for me? 

SDLT_Geek

Francis63 said:

I own my house and am selling it. 

My father has passed away and his estate (including his house) is left in his will to myself and 3 siblings in a trust. Only my eldest sister and I are executors and the two surviving beneficiaries of the trust (mum and dad were the other two - now both deceased). Their wishes were for the estate to be divided equally between all four siblings. 

We have probate for both mum & dad and are considering selling their house now. 

We were advised not to do the assent if selling straight away. 

The estate is below any inheritance tax liability.

If I were to buy it (or have it transferred to me) paying out my other three siblings what would be the SDLT implications (if any) for me? 

You should expect to pay stamp duty land tax on the "chargeable consideration" if that is over £125,000.  That is assuming you buy the property once you have sold your home and either:
(a)  You have no other property interests or
(b)  You count as replacing your main residence.

The "chargeable consideration" could be:
(i) The whole value of the inherited house if you buy it from the executors for full value without any assents / appropriations having been made.
(ii) The amount you pay if your share is assented / appropriated to you.

Noneforit999

Assuming there are 4 beneficiaries (and you are one of them) of the house and you want to buy it, you pay SDLT on 75% of the agreed amount you are buying it for.

This assumes each beneficiary gets an equal share of the house. 

We are going through a similar thing, Wife's grans house which was left to my wife and her sister for 50% each. Probate all done but our lender has said if we want to borrow more than the 50% my wife has been left of the house, we need to do the assent first and get the house into the beneficiaries names to enable us to do this. If its left in the estate, we can only borrow the 50% to buy her sister out apparently. 

Francis63

SDLT_Geek said:

You should expect to pay stamp duty land tax on the "chargeable consideration" if that is over £125,000

.  That is assuming you buy the property once you have sold your home and either:
(a)  You have no other property interests or
(b)  You count as replacing your main residence.

The "chargeable consideration" could be:
(i) The whole value of the inherited house if you buy it from the executors for full value without any assents / appropriations having been made.
(ii) The amount you pay if your share is assented / appropriated to you.

I do have another small flat but that is not my main property, so this will be me selling my main residence and replacing it with my mother's residence. I will sell the flat later but can't deal with selling that right now as there's been so much stress as it is.
It's likely the value will be £500,000. Which I understand would normally be £15,000 in sdlt.

So as I am one of the two executors I will be buying (half of) it from myself, effectively. 

Also there are only we two as surviving trustees. 

So therefore could I not pay the tax on just £250,000 and still give the other three sibling  £125,000 each (as the 'wishes' are for the estate to be divided equally)?

Francis63

Noneforit999 said:

Assuming there are 4 beneficiaries (and you are one of them) of the house and you want to buy it, you pay SDLT on 75% of the agreed amount you are buying it for.

This assumes each beneficiary gets an equal share of the house. 

We are going through a similar thing, Wife's grans house which was left to my wife and her sister for 50% each. Probate all done but our lender has said if we want to borrow more than the 50% my wife has been left of the house, we need to do the assent first and get the house into the beneficiaries names to enable us to do this. If its left in the estate, we can only borrow the 50% to buy her sister out apparently. 

Thanks, I really don't understand this business of assent. Is it expensive and does it take a long time as per obtaining probate? Or is it a simple matter?

Not sure why it would make a difference to your lender, but if you are being gifted 50% of the house, you only need to borrow the other 50% no? 

GDB2222

Francis63 said:

SDLT_Geek said:

You should expect to pay stamp duty land tax on the "chargeable consideration" if that is over £125,000

.  That is assuming you buy the property once you have sold your home and either:
(a)  You have no other property interests or
(b)  You count as replacing your main residence.

The "chargeable consideration" could be:
(i) The whole value of the inherited house if you buy it from the executors for full value without any assents / appropriations having been made.
(ii) The amount you pay if your share is assented / appropriated to you.

I do have another small flat but that is not my main property, so this will be me selling my main residence and replacing it with my mother's residence. I will sell the flat later but can't deal with selling that right now as there's been so much stress as it is.
It's likely the value will be £500,000. Which I understand would normally be £15,000 in sdlt.

So as I am one of the two executors I will be buying (half of) it from myself, effectively. 

Also there are only we two as surviving trustees. 

So therefore could I not pay the tax on just £250,000 and still give the other three sibling  £125,000 each (as the 'wishes' are for the estate to be divided equally)?

That’s not right. You are not buying half from yourself. It makes no difference that you are one of the two executors.

At best, you are buying 75% from the 3 other beneficiaries. Assuming that they agree.

SDLT_Geek

GDB2222 said:

Francis63 said:

SDLT_Geek said:

You should expect to pay stamp duty land tax on the "chargeable consideration" if that is over £125,000

.  That is assuming you buy the property once you have sold your home and either:
(a)  You have no other property interests or
(b)  You count as replacing your main residence.

The "chargeable consideration" could be:
(i) The whole value of the inherited house if you buy it from the executors for full value without any assents / appropriations having been made.
(ii) The amount you pay if your share is assented / appropriated to you.

I do have another small flat but that is not my main property, so this will be me selling my main residence and replacing it with my mother's residence. I will sell the flat later but can't deal with selling that right now as there's been so much stress as it is.
It's likely the value will be £500,000. Which I understand would normally be £15,000 in sdlt.

So as I am one of the two executors I will be buying (half of) it from myself, effectively. 

Also there are only we two as surviving trustees. 

So therefore could I not pay the tax on just £250,000 and still give the other three sibling  £125,000 each (as the 'wishes' are for the estate to be divided equally)?

That’s not right. You are not buying half from yourself. It makes no difference that you are one of the two executors.

At best, you are buying 75% from the 3 other beneficiaries. Assuming that they agree.

Well put.

Francis63

Ok that's great advice thanks. Just needed to know the score and how to budget for it. 
Thank you.

Keep_pedalling

Are there significant other assets? If there are you could reduce the amount you need to pay the other beneficiaries by distributing the assets differently. For example if the house was worth £400k and there was £400k of other assets you could take you £200k share entirely from the property, buy the other half from the estate so that your siblings get their £200k share in cash.

Francis63

Keep_pedalling said:

Are there significant other assets? If there are you could reduce the amount you need to pay the other beneficiaries by distributing the assets differently. For example if the house was worth £400k and there was £400k of other assets you could take you £200k share entirely from the property, buy the other half from the estate so that your siblings get their £200k share in cash.

Thank you. 
No other assets though. (Very little in a current account).