Stamp Duty on Inherited Property

SJ2015

I am buying my 2 sisters' share of our inherited property, valued under probate at £285,000. I have to pay them £160,000 to buy them out. My solicitor says I can use this as the purchase price and pay Stamp Duty on this amount i.e. zero duty. My sisters' solicitor says I have to pay based on the full value of the house, and so must pay £1,750 in Stamp Duty. Who is right and how can there even be disagreement? Help!

SDLT_Geek

SJ2015 said:

I am buying my 2 sisters' share of our inherited property, valued under probate at £285,000. I have to pay them £160,000 to buy them out. My solicitor says I can use this as the purchase price and pay Stamp Duty on this amount i.e. zero duty. My sisters' solicitor says I have to pay based on the full value of the house, and so must pay £1,750 in Stamp Duty. Who is right and how can there even be disagreement? Help!

Is the property in England so that the relevant stamp duty is stamp duty land tax?

There are different ways of structuring your purchase. I am assuming that the property remains part of the estate, so that the three siblings do not have actual shares yet in the property, rather they have a right to see that the estate is administered properly.

One approach is for the personal representatives, who own the property, to sell the whole property to you for its full value. They would then deal with the cash in the estate, paying the various bills, you and your two sisters will each end up getting their share under the Will, which might mean your sisters get the £160,000 mentioned.

Another approach would be for you to be assented a share in the property according to your entitlement under the Will (this could involve some elements of “appropriation“ with you getting more of the property and less of the other assets, which could be quite efficient from an SDLT point of view). Your sisters could then be assented their shares in the property (perhaps a smaller share in the property with them getting more of the other assets). Once they have their shares in the property, you could then buy the shares out for £160,000.

On the first structure SDLT would be due on the full purchase price of the property, on the second structure it would be due on the £160,000 paid.

It could be a little bit more complicated if the property is mortgaged.

SJ2015

Thank you so much SDLTGeek. I have to apologise because I only gave a brief summary of my situation
and misrepresented it because I thought it would be better to simplify it.

Firstly, I live in England.

In fact, I completed and exchanged on the property on Dec 19. I felt, for various reasons, under pressure
to do so before Christmas. My sisters' solicitor were threatening to delay until the New Year because
my solicitor was not showing my purchase price as £285,000. Also, one of my sisters spoke with her
accountant and he said this was correct.

Amongst other things I 'felt' that maybe my solicitor's 'strategy' was some kind of tax avoidance, if not
tax evasion. In the end I instructed him to change his document and I ended up liable for £1,750 in Stamp Duty 
which I accepted just to complete this whole difficult process which started with my mother's death in June.

i thought I was content with this until I read recently various opinions on several websites that all claimed the
chargeable consideration for Stamp Duty should have been the amount I actually paid,
i.e. £160,000, as my solicitor had stated.

No one will probably believe this but it isn't about the money. I feel aggrieved that my sister's solicitor
may have been wrong and I caved in when I could have delayed until the New Year, even if my sister was
worried that to do so would risk going past the probate certificate validity period etc. 

My solicitor has told me to contact HMRC and they were very helpful and I know how to proceed if
I want to dispute the tax levied. I think I could very likely get a refund.

He said my sisters' solicitor may not be willing to speak to me so I have held off doing this.

Before anyone starts wading in with comments about how stupid I was, can I just say I have been
dealing not only with my mother's death but treatment for 2 new cancers since then. It has only
come clear in the last few weeks how this has all been affecting my thinking for months.

As said, I just don't understand how there can be 2 different interpretations of what constituted
the chargeable consideration. My mum's estate was her house. Probate was very
straightforward. I was owed £45K. I had
a £80,000 share. I bought out my sisters at just over £160K (expenses).

For my peace of mind I am almost tempted to pay a third solicitor for their advice.

I know this is insane. Given my medical conditions I should let this all go but I feel so
annoyed and frustrated, with the legal system and, unfairly, even a little bit with my sister.

Given all this I will understand if no one wants to comment. There are other threads that
confirm I didn't need to pay Stamp Duty.

Maybe what I am asking is should I just call my sisters' solicitor and insist on talking to them?

SDLT_Geek

SJ2015 said:

Thank you so much SDLTGeek. I have to apologise because I only gave a brief summary of my situation
and misrepresented it because I thought it would be better to simplify it.

Firstly, I live in England.

In fact, I completed and exchanged on the property on Dec 19. I felt, for various reasons, under pressure
to do so before Christmas. My sisters' solicitor were threatening to delay until the New Year because
my solicitor was not showing my purchase price as £285,000. Also, one of my sisters spoke with her
accountant and he said this was correct.

Amongst other things I 'felt' that maybe my solicitor's 'strategy' was some kind of tax avoidance, if not
tax evasion. In the end I instructed him to change his document and I ended up liable for £1,750 in Stamp Duty 
which I accepted just to complete this whole difficult process which started with my mother's death in June.

i thought I was content with this until I read recently various opinions on several websites that all claimed the
chargeable consideration for Stamp Duty should have been the amount I actually paid,
i.e. £160,000, as my solicitor had stated.

No one will probably believe this but it isn't about the money. I feel aggrieved that my sister's solicitor
may have been wrong and I caved in when I could have delayed until the New Year, even if my sister was
worried that to do so would risk going past the probate certificate validity period etc. 

My solicitor has told me to contact HMRC and they were very helpful and I know how to proceed if
I want to dispute the tax levied. I think I could very likely get a refund.

He said my sisters' solicitor may not be willing to speak to me so I have held off doing this.

Before anyone starts wading in with comments about how stupid I was, can I just say I have been
dealing not only with my mother's death but treatment for 2 new cancers since then. It has only
come clear in the last few weeks how this has all been affecting my thinking for months.

As said, I just don't understand how there can be 2 different interpretations of what constituted
the chargeable consideration. My mum's estate was her house. Probate was very
straightforward. I was owed £45K. I had
a £80,000 share. I bought out my sisters at just over £160K (expenses).

For my peace of mind I am almost tempted to pay a third solicitor for their advice.

I know this is insane. Given my medical conditions I should let this all go but I feel so
annoyed and frustrated, with the legal system and, unfairly, even a little bit with my sister.

Given all this I will understand if no one wants to comment. There are other threads that
confirm I didn't need to pay Stamp Duty.

Maybe what I am asking is should I just call my sisters' solicitor and insist on talking to them?

I am sorry to hear of your situation.  You might not like all of this, but here goes:

1.  I would not expect your sisters' solicitors to talk to you, in fact, it might be unprofessional of them to do so.

2.  You have enough on your plate, and for £1,750 I would let it go (easy for me to say, I know).

3.  It is difficult to argue the "chargeable consideration" for SDLT was not £285,000 if that is what the agreed documents say was paid.

4.  If you really want to keep going with this, and if in fact, on the documents as drawn, SDLT should have been assessed against £160,000, then the process of "amending" a return within 12 months is not too difficult.  There is HMRC guidance here https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns on how to amend a return and claim money back.

SJ2015

Dear SDLTGeek,

Thanks again for another very considered reply and for taking the time to read my query
and answer.

i agree that it is unlikely I could speak to my sisters' solicitor. My sister who handled probate and conveyancing might
be able to on my behalf but I don't want to trouble her with this,

You are also right about letting the money aspect go. Life is too short, especially at my age and given my health concerns.

The documents are all filed, done and dusted. If I want to pursue a refund I have all I need and know how to do it.
Thank you for your info on this.

There's not much more to say except a final thankyou for your help in this.