Stamp duty on inherited property?

shimmerinlights

Hi, 

Last year I inherited 50% of my late father's house.  My wife and I are intending to buy the other 50% share off of my sister. However I have a buy-to-let flat that is currently rented out. Does this mean I will have to pay the higher rate stamp duty on the 50% share I'm buying? I was wondering because the buy to let is not a 'second home' but rather an investment that I might be able to avoid it? 

Thanks.

Keep_pedalling

Yes, unless you are selling your existing home. 

What is the value of the inherited house and the total value of the estate? If there are substantial other assets you could reduce the the share you want to buy out by distributing the estate differently. For instance I’d the house is worth £400k and the rest of the estate £200, your sister gets all of the non house assets and you get 3/4 of the house leaving you only needing to buy out 1/4 for £100k.

shimmerinlights

The inherited house is £425k. We won't have an 'existing home' when we make the purchase as we'll already be living in the inherited property, but we will still have the Buy to Let. I wondered because it is an investment it might be considered different from a second home?

Hoenir

The criteria is the number of residential properties you own. The purpose of ownership is irrevelant. 

mebu60

shimmerinlights said:

The inherited house is £425k. We won't have an 'existing home' when we make the purchase as we'll already be living in the inherited property, but we will still have the Buy to Let. I wondered because it is an investment it might be considered different from a second home?

No, it applies to all purchases of additional property. As @Keep_pedalling suggests, why don't you redistribute the proceeds of the will via a Deed of Variation so you get the house (or more of it) and adjust the other assets accordingly? 

user1977

The variation would seem the simplest solution, though also paging @SDLT_Geek in case the higher rate might not apply anyway (not sure whether the fact it's a purchase of an additional interest in a property in which the OP already has a major interest, rather than an additional property, is relevant).

SDLT_Geek

user1977 said:

The variation would seem the simplest solution, though also paging @SDLT_Geek in case the higher rate might not apply anyway (not sure whether the fact it's a purchase of an additional interest in a property in which the OP already has a major interest, rather than an additional property, is relevant).

Sometimes buying an extra share in a property in which one already has a share can escape the extra 3% SDLT.  But there is a requirement that the person buying has lived in the property as their only or main residence throughout the whole of the previous three years.

shimmerinlights

Thanks for all your responses. So it looks like I do have to pay some amount of SDLT. The next question would then be as I inherited 50% share of the house valued at £425k, and I'm buying the remaining 50% for 212.5k is it this amount that will be taxed rather than the entire 425k value of the house? 

shiraz99

shimmerinlights said:

Thanks for all your responses. So it looks like I do have to pay some amount of SDLT. The next question would then be as I inherited 50% share of the house valued at £425k, and I'm buying the remaining 50% for 212.5k is it this amount that will be taxed rather than the entire 425k value of the house? 

It will be the amount you pay, therefore 50% of the value.

Keep_pedalling

shimmerinlights said:

Thanks for all your responses. So it looks like I do have to pay some amount of SDLT. The next question would then be as I inherited 50% share of the house valued at £425k, and I'm buying the remaining 50% for 212.5k is it this amount that will be taxed rather than the entire 425k value of the house? 

Was the house the only asset in the estate? If not see my earlier post.

shimmerinlights

Thanks for your replies. So if the SDLT threshold standard rate is 0 under 250k then I assume I will only be liable for the 3% second home rate?