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Inherited 50% Share of Home with Sibling Who Lives in the House
Donnywhite1801
Posts: 13 Forumite
So, I've inherited 50% share of my mum's home with my sister. She has lived in the property for over 40 years and her son (over 18) also lives there. My sister is not able to buy out my full 50% share at the current market value. There is no mortgage on the property that is worth around £250K.
They would prefer to stay in the house and I would like this too, but also want to make sure I can take advantage of a lump sum. Would an option be to for her to get a mortgage to buy, say, 30% of my share and for me to retain a 20% share of the house, with perhaps an agreement to sell within 10 years? This way I would get a lump sum but the 20% share I have left would also increase in value over that time.
Has anyone been in a similar situation?
They would prefer to stay in the house and I would like this too, but also want to make sure I can take advantage of a lump sum. Would an option be to for her to get a mortgage to buy, say, 30% of my share and for me to retain a 20% share of the house, with perhaps an agreement to sell within 10 years? This way I would get a lump sum but the 20% share I have left would also increase in value over that time.
Has anyone been in a similar situation?
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Comments
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not ideal is it. when it sells I presume you will be liable to CGT? Who is responsible for maintenance? Is your sister going to pay you rent for your half?0
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No it isn't but certainly don't want to fall out over it. Haven't got a clue about CGT, all I know is that it's below the threshold for inheritance tax. If the house sold for £350K in 10 years time (just plucked a number out of the sky) 20% would be worth £70K so would there be any tax to pay on this????
With regards to maintenance, I would suggest being responsible for 20% of any maintenance that is essential but not cosmetic, which I think is fair. I wouldn't be asking for rent from my sister for the remaining 20% but just take the increase in the house value as the reward for not taking the full 50% share now.0 -
The CGT is on the increase in value over the time you owned it -there is a 3K allowance and then it is taxed at 24%
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OK thanks, so let's say at the moment 20% of the house value is worth £50K and in 10 years time that rises to £70K. The taxable amount is the difference (£20K) less £3K allowance = £17K. 24% of this would be just over £4K. That wouldn't bother me but I'm assuming that my sisters 50% share would only ever be subject to inheritance tax and not CGT, so why would the 20% I have left in the house be subject to CGT?
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CGT would apply if you are not living in the property1
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OK yeah, get it now. Thanks
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Would a mortgage company be happy with the arrangement do you think? I can't see why not but not got a lot of experience with mortgages.0
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Do you have probate and has a solicitor transferred ownership (deeds..) to you both? Or still owne by the estate of mum?0
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No, probate going through at the moment so not looking to do something straight away, just looking at options.
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don't know if you can have a mortgage on 30% of a property - what happens if they fall behind on payments?0
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