Stamp duty nightmare!!

MWT

longbay69 said:

Keep_pedalling said:

How much is the house worth and how much cash have you been left? If there is sufficient cash A deed of variation can redistribute the estate so that you inherit the house and him the cash which will avoid you having any SDLT liability. Even if there is not a DOV can still be used to give you a substantial reduction iin SDLT.

The difference between the house valuation and the cash is still 220k so I would have to pay SDLT on the difference, plus i would loose money that I’ve put into my LISA so that would be another 3k approx on top of about 11k SDLT. 

It sounds like you already have the answers, none of the options are perfect, you just have to go with the one with the lowest cost if you really must have this property...

On a technicality, if I've understood you correctly, you will not be losing money you have put into your LISA, you would just be losing the bonus that was added to your LISA.

Do take some advice though to confirm the numbers for your options before you decide...

Emmia

longbay69 said:

saajan_12 said:

longbay69 said:

Thanks for the comments, the house was left to my sibling and I was left with the cash after the IHT. this is currently going through probate so nothing has been transferred as yet, but probate is due very soon. It was my grandads, then my uncles and is where I will be living. 

I need a mortgage to buy out the house from my sibling. 

Thanks for the link for solicitors, I just hope I can get a quote for the work to actually confirm the right way to do this without extra charged hours as the cost can add up and it’s going to be very tight money wise!

What exactly does the will say - does it specify which assets go to who, or just the whole amount divided in a certain % split? If the latter, why is the sibling getting the house if they actually want the cash, and vice versa for you? The beneficiaries may be able to be varied within probate rather than inheriting and then buying.

That's much more likely to be effective to actually solve your problem. After probate is granted, buying a house will incur certain taxes which are relatively straightforward but high.  

The will is specific, the house to my sibling and the remainder to me and my other sibling. 

As the house is unfortunately worth double the cash I will get after IHT, then I need a mortgage to pay the rest. 

Surely the IHT is due on the entire estate, not just the cash part. Is your inheritance being reduced as that's paying the IHT bill, but your sibling isn't losing anything to IHT?

MWT

Emmia said:

longbay69 said:

saajan_12 said:

longbay69 said:

Thanks for the comments, the house was left to my sibling and I was left with the cash after the IHT. this is currently going through probate so nothing has been transferred as yet, but probate is due very soon. It was my grandads, then my uncles and is where I will be living. 

I need a mortgage to buy out the house from my sibling. 

Thanks for the link for solicitors, I just hope I can get a quote for the work to actually confirm the right way to do this without extra charged hours as the cost can add up and it’s going to be very tight money wise!

What exactly does the will say - does it specify which assets go to who, or just the whole amount divided in a certain % split? If the latter, why is the sibling getting the house if they actually want the cash, and vice versa for you? The beneficiaries may be able to be varied within probate rather than inheriting and then buying.

That's much more likely to be effective to actually solve your problem. After probate is granted, buying a house will incur certain taxes which are relatively straightforward but high.  

The will is specific, the house to my sibling and the remainder to me and my other sibling. 

As the house is unfortunately worth double the cash I will get after IHT, then I need a mortgage to pay the rest. 

Surely the IHT is due on the entire estate, not just the cash part. Is your inheritance being reduced as that's paying the IHT bill, but your sibling isn't losing anything to IHT?

This is the way it works with specific bequests, the house would only be affected if there was insufficient cash in the rest of the estate to cover IHT without selling the house.

It is possible that it is an unintended consequence, but absent any desire on the part of the brother to equalise the position between the siblings there is nothing wrong with this arrangement even if it wasn't exactly what the deceased had intended, as they may not have fully realised how much the IHT would be and how unbalanced the positions would become as the property value increased over the years and the value of other assets decreased.

... or it may be exactly what they intended the balance to be... unless there is some statement in the will that the deceased intended the split to be equal between the 3 siblings then there can be no presumption that anything other than the split as detailed was intended.

longbay69

missile said:

Emmia said:

missile said:

Maybe it would be wiser to look for another house

The OP wants this house presumably due to the family connection.. .

I did get that, but given her circumstances it seemed a very expensive option fraught with problems

I do understand this, but the house was originally bought by my grandad in the 40’s so holds a lot of memories for me. Crazy to think that I have the original receipt of purchase and there is now three zeros on the end of the price! 

Another house wouldn’t be an option anyway due to price in my area -for context this is not a big house, it’s a semi with 2 beds and a small room which would do for a nursery or office. I could however have and extension many years later if funds allow. 

So I would still be looking at the same issue regarding SDLT buying another property. 

longbay69

missile said:

Emmia said:

missile said:

Maybe it would be wiser to look for another house

The OP wants this house presumably due to the family connection.. .

I did get that, but given her circumstances it seemed a very expensive option fraught with problems

The reason for wanting this is house is the family connection, as I said it was originally bought by my grandad in the 40’s. 

For context the house is not big, just a 2.5 bed semi that needs quite a bit of work e.g. full rewire, ceilings down , bathroom kitchen etc. and another house in my area would be more expensive and smaller, but the issue with SDLT would remain!

longbay69

MWT said:

longbay69 said:

Keep_pedalling said:

How much is the house worth and how much cash have you been left? If there is sufficient cash A deed of variation can redistribute the estate so that you inherit the house and him the cash which will avoid you having any SDLT liability. Even if there is not a DOV can still be used to give you a substantial reduction iin SDLT.

The difference between the house valuation and the cash is still 220k so I would have to pay SDLT on the difference, plus i would loose money that I’ve put into my LISA so that would be another 3k approx on top of about 11k SDLT. 

It sounds like you already have the answers, none of the options are perfect, you just have to go with the one with the lowest cost if you really must have this property...

On a technicality, if I've understood you correctly, you will not be losing money you have put into your LISA, you would just be losing the bonus that was added to your LISA.

Do take some advice though to confirm the numbers for your options before you decide...

I am trying to get answers from a solicitor on this, just having difficulty tracking one down that will give me a cost for the answer, rather than saying something vague then anything additional will be £xxx per hour. 

I will lose money on my Lisa as they take 25% of what’s in there, not just the government bonus unfortunately which is rather unfair!

longbay69

Emmia said:

longbay69 said:

saajan_12 said:

longbay69 said:

Thanks for the comments, the house was left to my sibling and I was left with the cash after the IHT. this is currently going through probate so nothing has been transferred as yet, but probate is due very soon. It was my grandads, then my uncles and is where I will be living. 

I need a mortgage to buy out the house from my sibling. 

Thanks for the link for solicitors, I just hope I can get a quote for the work to actually confirm the right way to do this without extra charged hours as the cost can add up and it’s going to be very tight money wise!

What exactly does the will say - does it specify which assets go to who, or just the whole amount divided in a certain % split? If the latter, why is the sibling getting the house if they actually want the cash, and vice versa for you? The beneficiaries may be able to be varied within probate rather than inheriting and then buying.

That's much more likely to be effective to actually solve your problem. After probate is granted, buying a house will incur certain taxes which are relatively straightforward but high.  

The will is specific, the house to my sibling and the remainder to me and my other sibling. 

As the house is unfortunately worth double the cash I will get after IHT, then I need a mortgage to pay the rest. 

Surely the IHT is due on the entire estate, not just the cash part. Is your inheritance being reduced as that's paying the IHT bill, but your sibling isn't losing anything to IHT?

Yes the IHT is reduced off the entire estate so a % off each person has to be paid. But the value for stamp duty is still the market value not the value after IHT. My sibling will get the value of the house minus IHT. 

longbay69

MWT said:

Emmia said:

longbay69 said:

saajan_12 said:

longbay69 said:

Thanks for the comments, the house was left to my sibling and I was left with the cash after the IHT. this is currently going through probate so nothing has been transferred as yet, but probate is due very soon. It was my grandads, then my uncles and is where I will be living. 

I need a mortgage to buy out the house from my sibling. 

Thanks for the link for solicitors, I just hope I can get a quote for the work to actually confirm the right way to do this without extra charged hours as the cost can add up and it’s going to be very tight money wise!

What exactly does the will say - does it specify which assets go to who, or just the whole amount divided in a certain % split? If the latter, why is the sibling getting the house if they actually want the cash, and vice versa for you? The beneficiaries may be able to be varied within probate rather than inheriting and then buying.

That's much more likely to be effective to actually solve your problem. After probate is granted, buying a house will incur certain taxes which are relatively straightforward but high.  

The will is specific, the house to my sibling and the remainder to me and my other sibling. 

As the house is unfortunately worth double the cash I will get after IHT, then I need a mortgage to pay the rest. 

Surely the IHT is due on the entire estate, not just the cash part. Is your inheritance being reduced as that's paying the IHT bill, but your sibling isn't losing anything to IHT?

This is the way it works with specific bequests, the house would only be affected if there was insufficient cash in the rest of the estate to cover IHT without selling the house.

It is possible that it is an unintended consequence, but absent any desire on the part of the brother to equalise the position between the siblings there is nothing wrong with this arrangement even if it wasn't exactly what the deceased had intended, as they may not have fully realised how much the IHT would be and how unbalanced the positions would become as the property value increased over the years and the value of other assets decreased.

... or it may be exactly what they intended the balance to be... unless there is some statement in the will that the deceased intended the split to be equal between the 3 siblings then there can be no presumption that anything other than the split as detailed was intended.

It is very unfortunate how the will was written as I know he believed that it was split between us. It’s also just an old fashioned way of doing the will, house to eldest and the rest to the other/s. 

Also unfortunately my sibling doesn’t seem to want to rectify this split, so I am in the position I am with wanting to keep the house in the family, but having to get a very large mortgage to pay the IHT and my sibling!

MWT

longbay69 said:

MWT said:

longbay69 said:

Keep_pedalling said:

How much is the house worth and how much cash have you been left? If there is sufficient cash A deed of variation can redistribute the estate so that you inherit the house and him the cash which will avoid you having any SDLT liability. Even if there is not a DOV can still be used to give you a substantial reduction iin SDLT.

The difference between the house valuation and the cash is still 220k so I would have to pay SDLT on the difference, plus i would loose money that I’ve put into my LISA so that would be another 3k approx on top of about 11k SDLT. 

It sounds like you already have the answers, none of the options are perfect, you just have to go with the one with the lowest cost if you really must have this property...

On a technicality, if I've understood you correctly, you will not be losing money you have put into your LISA, you would just be losing the bonus that was added to your LISA.

Do take some advice though to confirm the numbers for your options before you decide...

I am trying to get answers from a solicitor on this, just having difficulty tracking one down that will give me a cost for the answer, rather than saying something vague then anything additional will be £xxx per hour. 

I will lose money on my Lisa as they take 25% of what’s in there, not just the government bonus unfortunately which is rather unfair!

You are not going to find a solicitor willing to quote a fixed fee for what might turn out to be a more complex matter than it first appears to be unfortunately.

... and yes, you are right about the LISA, if you use it for a purpose other than as allowed under the rules the 25% penalty ends up costing you around 6%.

longbay69 said:

Yes the IHT is reduced off the entire estate so a % off each person has to be paid. But the value for stamp duty is still the market value not the value after IHT. My sibling will get the value of the house minus IHT. 

If the house is a specific bequest, the eldest gets the house and the impact of the IHT for the whole estate including the house falls entirely upon you and your other sibling as the residuary legatees, unless the 3 of you can agree otherwise.