Refund of the higher rates of Stamp Duty Land Tax on inherited property.

greatdane665

My sibling and I inherited a house after a parent passed away left year. We are both 50% owners but neither of us live locally so put the property on the market. We have never lived at this address. The house is proving difficult to sell despite multiple reductions.

In the next couple of weeks I am due to complete on a purchase of my own first home so will have to pay an additional 5% in stamp duty. (£37,500 instead of £12,500 if I inherited property had sold). Will I be able to apply for a refund of the higher rates of Stamp Duty Land Tax if I sell the inherited property within the next three years?

SDLT_Geek

greatdane665 said:

My sibling and I inherited a house after a parent passed away left year. We are both 50% owners but neither of us live locally so put the property on the market. We have never lived at this address. The house is proving difficult to sell despite multiple reductions.

In the next couple of weeks I am due to complete on a purchase of my own first home so will have to pay an additional 5% in stamp duty. (£37,500 instead of £12,500 if I inherited property had sold). Will I be able to apply for a refund of the higher rates of Stamp Duty Land Tax if I sell the inherited property within the next three years?

How about you have a look at the rules which are likely to mean you will not have to pay the extra 5% SDLT in the first place?

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09795

Your conveyancer has not advised you on this?  If they have missed that, then this is shocking!!

If the extra 5% is due, you would not be able to reclaim it as you have never lived in the inherited property.

mebu60

Who says you have to pay the additional SDLT? If you sell and buy a principal private residence there is no additional SDLT to pay if you own an additional property so I'm surprised that there would be for buying your first permanent home. 

SDLT_Geek

mebu60 said:

Who says you have to pay the additional SDLT? If you sell and buy a principal private residence there is no additional SDLT to pay if you own an additional property so I'm surprised that there would be for buying your first permanent home. 

Buying a first home can suffer the extra 5% SDLT if another property is owned (for example a let property). 

But there are special rules for shares of not over 50% in a property inherited within the previous three years.

jonnydeppiwish!

I’m hoping you haven’t put the inherited house in your own names? If you have then that’s going to be a very costly mistake!

saajan_12

mebu60 said:

Who says you have to pay the additional SDLT? If you sell and buy a principal private residence there is no additional SDLT to pay if you own an additional property so I'm surprised that there would be for buying your first permanent home. 

Well then I guess you're surprised - you may well have to pay additional SDLT on buying a main residence if you already own another property. The reason is because you're increasing the number of properties you own (rather than moving) and HMRC doesn't know which is which. 

In OP's case, the only way they wouldn't owe the additional SDLT is if the inherited properyt was still in the decceased's estate and not transferred into the beneficiaries' names. 

SDLT_Geek

jonnydeppiwish! said:

I’m hoping you haven’t put the inherited house in your own names? If you have then that’s going to be a very costly mistake!

That would not necessarily be a problem.  See the guidance: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09795

SDLT_Geek

saajan_12 said:

mebu60 said:

Who says you have to pay the additional SDLT? If you sell and buy a principal private residence there is no additional SDLT to pay if you own an additional property so I'm surprised that there would be for buying your first permanent home. 

Well then I guess you're surprised - you may well have to pay additional SDLT on buying a main residence if you already own another property. The reason is because you're increasing the number of properties you own (rather than moving) and HMRC doesn't know which is which. 

In OP's case, the only way they wouldn't owe the additional SDLT is if the inherited properyt was still in the decceased's estate and not transferred into the beneficiaries' names. 

It is not necessarily a problem if the inherited property has been assented to the beneficiaries.  The guidance covers it: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09795

greatdane665

jonnydeppiwish! said:

I’m hoping you haven’t put the inherited house in your own names? If you have then that’s going to be a very costly mistake!

Could you be more constructive in your wording and explain why this is the case? SLDT_Geek has been very helpful in providing links and documentation which I greatly appreciate.

greatdane665

SDLT_Geek said:

greatdane665 said:

My sibling and I inherited a house after a parent passed away left year. We are both 50% owners but neither of us live locally so put the property on the market. We have never lived at this address. The house is proving difficult to sell despite multiple reductions.

In the next couple of weeks I am due to complete on a purchase of my own first home so will have to pay an additional 5% in stamp duty. (£37,500 instead of £12,500 if I inherited property had sold). Will I be able to apply for a refund of the higher rates of Stamp Duty Land Tax if I sell the inherited property within the next three years?

How about you have a look at the rules which are likely to mean you will not have to pay the extra 5% SDLT in the first place?

<link>

Your conveyancer has not advised you on this?  If they have missed that, then this is shocking!!

If the extra 5% is due, you would not be able to reclaim it as you have never lived in the inherited property.

thank you very much for posting this link. I will discuss this with my conveyancer. I really appreciate you taking time to post such useful advice.