Mechanics of buying out share of inherited property

MBdriver

Father died intestate in 2006. House inherited (no IHT) 50/50 (implicit) by brother and myself. But owing to mental health circumstances at the time house wholly in my name. House is his only residence, I have never lived there since probate. Since probate, value of house has increased by £140K (from £140K to £280K). I now want brother to buy out my share so he will pay me £140K, but of this my gain is only £70K. Cash purchase, no lender, no mortgage etc. I will likely have some CGT liability to declare, but what are the mechancis of this process? Apart from doing a TR1, is there any legal requirement to have conveyancing etc? Will my brother have any stamp duty requirement, and if so how is this effected? Does he have to contact some authority somewhere? Does he need a solicitor? I am no stranger to dealing with Land Registry, but haven't done any stand-alone stamp duty transactions before. Idiot's guide to the buying out process much appreciated ! Many thanks

propertyrental

Putting aside the rather questionable "died intestate in 2006. House inherited (no IHT) 50/50 (implicit) by brother and myself. But owing to mental health circumstances at the time house wholly in my name. "

and assuming there is currently no mortgage:

* You hand over half the current value (280/2 = £140K) to brother
* You pay relevant SDLT (will depend if you already own a property). See gov calculator here
You submit TR1, AP1, ID1  along with proof of SDLT payment to Land Registry. See guide here.

Sorted. No need for solicitor.

Whether you want/need to do Searches, survey etc is up to you, but if you know the property................

ps https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns

SDLT_Geek

propertyrental said:

Putting aside the rather questionable "died intestate in 2006. House inherited (no IHT) 50/50 (implicit) by brother and myself. But owing to mental health circumstances at the time house wholly in my name. "

and assuming there is currently no mortgage:

* You hand over half the current value (280/2 = £140K) to brother
* You pay relevant SDLT (will depend if you already own a property). See gov calculator here
You submit TR1, AP1, ID1  along with proof of SDLT payment to Land Registry. See guide here.

Sorted. No need for solicitor.

Whether you want/need to do Searches, survey etc is up to you, but if you know the property................

ps https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns

The house is, according to the OP, in the sole name of the OP already.  If that is right then a TR1 is not appropriate.  Perhaps a deed of assignment of a beneficial half share?

Edit: Whoops, I got this the wrong way round, see below.

user1977

SDLT_Geek said:

propertyrental said:

Putting aside the rather questionable "died intestate in 2006. House inherited (no IHT) 50/50 (implicit) by brother and myself. But owing to mental health circumstances at the time house wholly in my name. "

and assuming there is currently no mortgage:

* You hand over half the current value (280/2 = £140K) to brother
* You pay relevant SDLT (will depend if you already own a property). See gov calculator here
You submit TR1, AP1, ID1  along with proof of SDLT payment to Land Registry. See guide here.

Sorted. No need for solicitor.

Whether you want/need to do Searches, survey etc is up to you, but if you know the property................

ps https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns

The house is, according to the OP, in the sole name of the OP already.  If that is right then a TR1 is not appropriate.  Perhaps a deed of assignment of a beneficial half share?

Other way round, the OP is selling to their brother.

SDLT_Geek

user1977 said:

SDLT_Geek said:

propertyrental said:

Putting aside the rather questionable "died intestate in 2006. House inherited (no IHT) 50/50 (implicit) by brother and myself. But owing to mental health circumstances at the time house wholly in my name. "

and assuming there is currently no mortgage:

* You hand over half the current value (280/2 = £140K) to brother
* You pay relevant SDLT (will depend if you already own a property). See gov calculator here
You submit TR1, AP1, ID1  along with proof of SDLT payment to Land Registry. See guide here.

Sorted. No need for solicitor.

Whether you want/need to do Searches, survey etc is up to you, but if you know the property................

ps https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns

The house is, according to the OP, in the sole name of the OP already.  If that is right then a TR1 is not appropriate.  Perhaps a deed of assignment of a beneficial half share?

Other way round, the OP is selling to their brother.

Whoops, sorry!

MBdriver

Thanks for your replies so far. I'm not sure of the final view on TR1 vs DoA. A solicitor (initial enquiries only, no longer involved) has already suggested that although the LR entry shows me as the sole owner, in fact as a result of my father's intestacy my brother has a de facto 50% beneficial interest and I do not contest this. For clarity, there is no mortgage. The house is brother's primary (and sole) residence and always has been. I have other properties and in effect my share of the father's house is "second" property, so I expect to have CGT liability on the "sale". Also I presume my brother as "buyer" will have the stamp duty liability. I would appreciate clarification on a Deed of Assignment. My understanding is that a deed has no consideration, but I am not proposing simply transferring my ownership share in its entirety to my brother. Rather I am selling him my share, so there will very definitely be a consideration, namely £140K. As regards SDLT, is this assessed on the actually selling price of £140K, or just on the gain in value since probate, of £70K?

Again, many thanks.

SDLT_Geek

MBdriver said:

Thanks for your replies so far. I'm not sure of the final view on TR1 vs DoA.
An advantage of a deed of assignment could be that it might make it clearer that the interest you are disposing of is not the whole property, but only a half share.  This could be relevant for capital gains purposes where your argument is that you are only disposing of a half share worth £140,000, not the entire property with a value of £280,000 (with a market value rule applying for CGT).

Edit to add: A TR1 would be needed as well in order for title to be transferred at the Land Registry.  Perhaps both jobs (assignment of beneficial half share and transfer of legal title) could be done in the TR1, using the wording suggested in the Land Registry Practice Guide 21 section 8: https://www.gov.uk/government/publications/using-transfer-forms-for-less-straightforward-transactions/practice-guide-21-using-our-forms-for-complex-and-more-unusual-transactions#transfer-of-a-share

A solicitor (initial enquiries only, no longer involved) has already suggested that although the LR entry shows me as the sole owner, in fact as a result of my father's intestacy my brother has a de facto 50% beneficial interest and I do not contest this. For clarity, there is no mortgage.

The house is brother's primary (and sole) residence and always has been. I have other properties and in effect my share of the father's house is "second" property, so I expect to have CGT liability on the "sale".
Yes.

Also I presume my brother as "buyer" will have the stamp duty liability.
Yes.

I would appreciate clarification on a Deed of Assignment. My understanding is that a deed has no consideration,
A deed can be used to provide legal effectiveness where there is no "consideration", such as for a gift, but deeds are often used where there is consideration.  For example there could be a deed of assignment of a 50% share in a property in return for £140,000.

 but I am not proposing simply transferring my ownership share in its entirety to my brother. Rather I am selling him my share, so there will very definitely be a consideration, namely £140K.

As regards SDLT, is this assessed on the actually selling price of £140K, or just on the gain in value since probate, of £70K?
The SDLT woud be assessed on the purchase price of £140,000.  At consideration of £40,000 or more a land transaction return is needed, but the current threshold for payment of SDLT is £250,000 where the 3% surcharge for additional properties does not apply.

Again, many thanks.

See notes in bold above.

MBdriver

Many many thanks SDLT_Geek, that is all clear and extremely helpful. I am very grateful )

I do like the idea of belt and braces for clarifying the true value of what is being sold - I could forsee only too well a fight with HMRC over the basis of the CGT ! Again, many thanks.