Deed of variation query - passing inherited house to my sister

SarahB16

Sorry if my posts are not clear. 

The purpose of the DoV was so that my sister did not have to pay stamp duty, i.e. to save her £10k as she wished to live in/own my mum’s house. 

In an earlier post I did say my sister would need to pay the market value or near to market value for my mum’s house. 

My mum’s estate comprises of primarily just the house.  There is no significant amount of cash so there would be no need for a DoV on the cash amount and that is irrelevant as the purpose of the DoV was so my sister avoiding paying stamp duty. 

Of course if my mum needs to sell her house to pay for care then this all changes. 

I actually am now thinking the DoV may not be legal if associated with it is another legal document which compels my sister to pay the market value to me for the house so that she receives the house. 

Spendless, yes, that’s correct except the DoV was for the house to be left to my sister so there wouldn’t be stamp duty to pay by her. 

As I wouldn’t be liable to any inheritance tax there is no need for a DoV for £10k (stamp duty) instead I could simply give out additional cash amounts to my sister and nieces how I see fit. However, there is no need to bring that into my original post/question.  

Thank you for your replies. 

Mojisola

SarahB16 said:

The purpose of the DoV was so that my sister did not have to pay stamp duty, i.e. to save her £10k as she wished to live in/own my mum’s house. 

In an earlier post I did say my sister would need to pay the market value or near to market value for my mum’s house. 

I actually am now thinking the DoV may not be legal if associated with it is another legal document which compels my sister to pay the market value to me for the house so that she receives the house. 

I would avoid doing this - sell the house to your sister at the market value and then gift her an amount from the sale to cover the tax.

As you won't have EA fees to pay, you'll be making a saving on an open market sale.

SarahB16

Thank you Mojisola.  I agree, that's what I will do.  

stig

I know you’re just  thinking through the options, but what you’re planning to arrange is pretty much the definition of tax avoidance.

If you inherit the house and give it to your sister as a gift, there would be no SDLT as the charge is based on consideration changing hands.

However you’d like the tax consequences of a gift, but to actually receive the value of the property from your sister.

if your mother is determined  not to leave your sister anything in her will, all a deed of variation can achieve is to move some of the value of your inheritance to your sister instead. It can’t compel her to put value into the estate, which is the step that you’re hoping would save SDLT I think. 

getmore4less

A DOV can not have consideration  ie. you can't DOV on the condition you get something else like a load of cash when your sister sells her house.

That's your first hurdle.