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Sell inherited property to sibling for less than probate value
MontyMoggs
Posts: 1 Newbie
Hi, first post so apologies if I have made any error in where to post.
My father has passed away and I am set to inherit both of his properties.
My half sibling lives in dad's second property and has done for several years.
This has been an agreement between them and their stepfather (my dad) as it was beneficial to both parties, 1. for my sibling to live independently and 2. for my dad to have the property occupied rather than sat empty.
No rent was paid, my sibling was allowed use of the property on the agreement that they paid all bills and relavent costs for living there and kept it in a good state of repair (council tax, insurance, utilities etc.)
They are reluctant to move, but they also understand that I will need to sell one of the properties in order to pay the inheritance tax due on the estate.
Personally I would like to hold on to my father's main residence, which leaves this second property in the firing line to be disposed of.
They have expressed interest in buying it from me, which I am agreeable to, and would sell the property to them at a discount. (they are likely to fall short of the probate valuation by around £40k on a mortgage anyway.)
I would be happy to take that "loss" on the value of the property as it keeps the family happy and I won't exactly miss what I've never had, so long as the amount raised by the sale covers the somewhat scary amount of IHT & solicitors fees owed, and hopefully allows me some funds to make repairs to the property I wish to keep.
I understand the difference between the sale price and the market value of the house would be treated as a "gift".
Would this be a workable solution for everyone involved or is it more trouble than it's worth selling it to them this way?
I have read that it is possible to get a mortgage in this kind of situation, but that it may be more difficult for them to find a lender?
I have no real world experience of property and mortgage matters so I'm quite lost with it all
Thanks
My father has passed away and I am set to inherit both of his properties.
My half sibling lives in dad's second property and has done for several years.
This has been an agreement between them and their stepfather (my dad) as it was beneficial to both parties, 1. for my sibling to live independently and 2. for my dad to have the property occupied rather than sat empty.
No rent was paid, my sibling was allowed use of the property on the agreement that they paid all bills and relavent costs for living there and kept it in a good state of repair (council tax, insurance, utilities etc.)
They are reluctant to move, but they also understand that I will need to sell one of the properties in order to pay the inheritance tax due on the estate.
Personally I would like to hold on to my father's main residence, which leaves this second property in the firing line to be disposed of.
They have expressed interest in buying it from me, which I am agreeable to, and would sell the property to them at a discount. (they are likely to fall short of the probate valuation by around £40k on a mortgage anyway.)
I would be happy to take that "loss" on the value of the property as it keeps the family happy and I won't exactly miss what I've never had, so long as the amount raised by the sale covers the somewhat scary amount of IHT & solicitors fees owed, and hopefully allows me some funds to make repairs to the property I wish to keep.
I understand the difference between the sale price and the market value of the house would be treated as a "gift".
Would this be a workable solution for everyone involved or is it more trouble than it's worth selling it to them this way?
I have read that it is possible to get a mortgage in this kind of situation, but that it may be more difficult for them to find a lender?
I have no real world experience of property and mortgage matters so I'm quite lost with it all
Thanks
0
Comments
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If you are happy with the price you will get from this arrangement then I would think it is going to be a lot quicker with lower costs than selling on the open market.If you do this then it would be worthwhile making a deed of variation to avoid your gift staying in your own estate for IHT purposes for the next 7 years.0
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