SDLT and inherited share of property

Nova1307

Hi all, 

I inherited a share (16.66%) of my late father's home which my mother still currently lives in. 

I don't own any other properties and so if I were to buy a property in the future as my main residence would I have to pay second home SDLT given that I technically own a share in a property or would the percentage share not be considered high enough?

If any future property I were to buy would be classed as a second home would the best course of action be to sell my share to a sibling before buying my own property?

Thanks

Keep_pedalling

Did your father’s will also give your mother the right to live there for life?

Have any changes been made to the land registry?

Bigphil1474

It's the value of the property that is relevant - if it's worth less than £40k in total, then it isn't counted. Doesn't matter what share you have. Worth finding out whether you actually own that third of your dad's half or if it's your mothers until she goes? Assuming you do own it, you would have to pay the higher rate SDLT (In England). Maybe sell to your mother or to the other part owners first?

Nova1307

Property is in Scotland and my father never made a will which made things a bit less straight forward. Both he and my mother owned it jointly and the land registry has been updated to include myself and two siblings who take over my father's half share. 

Property is worth around £250k and so my share would be £42k. 

My mother is in good health and will likely live there for another 10-15 years (all being well) and it's highly likely I would be looking to buy a place of my own within that period. 

Is selling my share to my mother/sibling a straight forward process that can be done through a solicitor for a nominal fee? 

Alderbank

You might have confused us by referring to SDLT which is an English tax. We don't have SDLT here, our equivalent is LBTT but there are many differences.

Since your mother lives in the house, on your father's death she inherited the first £473,000 of his interest in the family home of due to her prior rights under Scots law here.

Are your figures correct? 

Nova1307

Alderbank said:

You might have confused us by referring to SDLT which is an English tax. We don't have SDLT here, our equivalent is LBTT but there are many differences.

Since your mother lives in the house, on your father's death she inherited the first £473,000 of his interest in the family home of due to her prior rights under Scots law here.

Are your figures correct? 

My apologies, I thought SDLT was UK wide. 

As mentioned, there was no will and my mother wanted the three children to inherit half of the family home (my father's half) and so she arranged this with the solicitor who was handling my father's estate even though she could have taken sole ownership herself given that the value of the house is around £250k and so well under the £473k you mentioned. 

I am concerned that a £42k share in my mother's home is going to be costly from a LBTT perspective. When I come to buy a home of my own perhaps the best course of action is to sell my share to my mother beforehand?

sheramber

You will have a potential Capital Gains Tax  the increase in value of yiur share from when you acquired it to when you sell it, unless you are living there.

Selling to a contacted person ( mother) means the sale value is the market value, regardless of what price is paid.

you have already lost your first time buyer discount.

of course, tax rules could be different in the future. 

Nova1307

sheramber said:

You will have a potential Capital Gains Tax  the increase in value of yiur share from when you acquired it to when you sell it, unless you are living there.

Selling to a contacted person ( mother) means the sale value is the market value, regardless of what price is paid.

you have already lost your first time buyer discount.

of course, tax rules could be different in the future. 

The value of the property hasn't increased since I inherited my share but I am aware this could change between now and when my share is sold.

I have owned a property in the past but sold it prior to my Dad's passing and so first time buyer discount doesn't apply to me anyway.

Alderbank

Just to clarify, you didn't inherit a share of your parents' home - after your father's death your mother, who owned the house 100%, decided to gift part ownership of the property to each of her children?

What would be the point of that?

The Scottish Government is currently reviewing the rules about LBTT for people in your position.

Nova1307

Alderbank said:

Just to clarify, you didn't inherit a share of your parents' home - after your father's death your mother, who owned the house 100%, decided to gift part ownership of the property to each of her children?

What would be the point of that?

The Scottish Government is currently reviewing the rules about LBTT for people in your position.

I wasn't involved in the discussions with her solicitor but she wanted us to have our fathers share (just a personal wish) and wouldn't have been aware of the second home implications at the time. 

I'll keep an eye out for any LBTT rule changes but if having this share is going to be a hindrance then I will discuss the idea of selling my share to her ahead of any future property purchase.