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hungryman
Posts: 5 Forumite
Hi all.
Can I pick your collective brains please?
My 2 brothers & me have been left Dad's mortgage-free home in a will (50% share to me, 25% share to each of them).
Inheritance tax, probate etc has been sorted already, house valued at £400,000 and it's currently still in the Dad / Estate name waiting for us to decide what we're doing with it.
All 3 of us own homes already so none of us want to live there but I'd like to hold onto it and rent it out if possible.
The other 2 aren't interested in being joint landlords or anything liek that, so we've agreed that I just buy them out and I'm applying for a £200,000 mortgage to get the money to do it.
Estate solicitor says we can just do a 'deed of variation' to change the will for the house to be left just to me and then I buy the others out.
I understand that a 'normal' property inheritance from dad to son wouldn't have any stamp duty etc.
But what's confusing me in our case is if the £100,000 (x 2) that I give to my brothers is treated as a 'purchase' and have stamp duty (or any other taxes)?
If anyone has any idea and/or has been in the same situation before, would be grateful for your feedback.
I've asked the solicitor who is handling the estate but as he hasn't been great so far, I'm just trying to do my own research too.
Sadly if there will be huge stamp duty charges etc to be paid, this could be a deal breaker on whether I keep the house at all (tbh some days I wonder if I'm only hanging onto it for sentimental reasons as it was Dad's).
:undecided
Can I pick your collective brains please?
My 2 brothers & me have been left Dad's mortgage-free home in a will (50% share to me, 25% share to each of them).
Inheritance tax, probate etc has been sorted already, house valued at £400,000 and it's currently still in the Dad / Estate name waiting for us to decide what we're doing with it.
All 3 of us own homes already so none of us want to live there but I'd like to hold onto it and rent it out if possible.
The other 2 aren't interested in being joint landlords or anything liek that, so we've agreed that I just buy them out and I'm applying for a £200,000 mortgage to get the money to do it.
Estate solicitor says we can just do a 'deed of variation' to change the will for the house to be left just to me and then I buy the others out.
I understand that a 'normal' property inheritance from dad to son wouldn't have any stamp duty etc.
But what's confusing me in our case is if the £100,000 (x 2) that I give to my brothers is treated as a 'purchase' and have stamp duty (or any other taxes)?
If anyone has any idea and/or has been in the same situation before, would be grateful for your feedback.
I've asked the solicitor who is handling the estate but as he hasn't been great so far, I'm just trying to do my own research too.
Sadly if there will be huge stamp duty charges etc to be paid, this could be a deal breaker on whether I keep the house at all (tbh some days I wonder if I'm only hanging onto it for sentimental reasons as it was Dad's).
:undecided
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Comments
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(tbh some days I wonder if I'm only hanging onto it for sentimental reasons as it was Dad's).
Not a good reason to start a business? How would you feel if tenants didn't treat the place with care and respect?
If the will were varied so that the property was left to you alone, then you couldn't "buy out" your siblings as they would have no rights in the property?1 -
Major red flag!
Get it sold, tenants won’t care about your memories of your dad and it’ll feel rubbish when the6 don’t treat it with respect.
If you want to be a landlord take your share of the sale proceeds and buy a suitable BTL property.
Your memories aten’t Tied to bricks and mortar, you will still have them.
Sorry for your loss.3 -
You are "due" 50% of the property's value - £200k-worth - from the estate. You are buying the other 50%, either from the estate, or from your brothers. SDLT is payable on those purchased shares.Hi all.
Can I pick your collective brains please?
My 2 brothers & me have been left Dad's mortgage-free home in a will (50% share to me, 25% share to each of them).
Inheritance tax, probate etc has been sorted already, house valued at £400,000 and it's currently still in the Dad / Estate name waiting for us to decide what we're doing with it.
...
we've agreed that I just buy them out and I'm applying for a £200,000 mortgage to get the money to do it.
Estate solicitor says we can just do a 'deed of variation' to change the will for the house to be left just to me and then I buy the others out.
I understand that a 'normal' property inheritance from dad to son wouldn't have any stamp duty etc.
If there are other assets in the estate, then if you buy the other 50% from the estate, the SDLT may be reduced. So, if you're due £250k-worth total, you're trading £50k of bequest for 12.5% of the property, and only buying £150k-worth (37.5%) from the estate.
I'd agree with the others, though. This is a recipe for a nightmare.
Two questions for you...
1. If you had £200k in cash suddenly available, would you really be looking to borrow another £200k to start a residential letting business?
2. If you were, would you spend all £400k on this particular property?
Then there's the emotional aspect. It is not your father's home any more. It is just a currently-vacant property that your now-deceased father happened to live in in the past. If you cannot see that, then you're too emotionally involved to let it. Tenants didn't know your father, and (frankly) don't care about the fact he used to live there. They're renting somewhere to live in. They won't necessarily take the same care of it as you will think is appropriate. This has all the ingredients for conflict.
Sell it, divide the money, and if you really want a letting business, find the right property.0 -
onwards&upwards wrote: »Major red flag!
Get it sold, tenants won’t care about your memories of your dad and it’ll feel rubbish when the6 don’t treat it with respect.
If you want to be a landlord take your share of the sale proceeds and buy a suitable BTL property.
Your memories aten’t Tied to bricks and mortar, you will still have them.
Sorry for your loss.
Thanks. Actually I'm ok with dealing with the landlord and tenant stuff as I'm already a landlord with another property that I rent out.
So ironically the only emotional stuff not because I might get upset with bad tenants etc, but because our Dad had a business head and knew the house was a great future rental return investment (all those years of watching Homes Under The Hammer each morning while he had breakfast :rotfl:!!!) and if us 3 brothers aren't going to joint landlord on it together, then he would have wanted me to add it to my (tiny!) rental portfolio instead.
It's in a really popular rental area and will rent out well (we've already had quite a few BTL investors putting letters thru the door asking what our plans are or if they can HMO sublet it from us), but it's just the issue of any potential stamp duty charges that I need to be sure of before I really go further with my plan to own it.0 -
A deed of variation will not work because because you are paying the original beneficiaries a consideration.Estate solicitor says we can just do a 'deed of variation' to change the will for the house to be left just to me and then I buy the others out.
As said above you can re-shuffle the distribution of the total assets such that you take all your 1/3rd share as part of the property. You then have a contract to buy the %age you do not own from the estate for a cash payment.0 -
You are "due" 50% of the property's value - £200k-worth - from the estate. You are buying the other 50%, either from the estate, or from your brothers. SDLT is payable on those purchased shares.
I understand there is no SDLT payable on the assent of a property in a will.
I also understand that a will can be varied as long as all the beneficiaries agree.
So, there's a property worth £400k with the OP due to receive 50% and the two brothers to receive 25% each.
So why not let the OP get a £200k mortgage and gift £100k each to the two brothers as a PET and then assent the house to the OP?
No SDLT to pay on the assent and, as long as the OP lives for another seven years, no tax to pay on the gifts to the brothers.0 -
https://www.theguardian.com/money/2018/mar/12/stamp-duty-share-property-inherited-sdlt
seems relevant but this is the poster with expertise in the area
https://forums.moneysavingexpert.com/member.html?u=26339790 -
That would be blatant fraud since the two transactions are obviously linked. Also the mortgage co will appoint a solicitor to act for them who will want the transaction done above board.trickydicky802 wrote: »I understand there is no SDLT payable on the assent of a property in a will.
I also understand that a will can be varied as long as all the beneficiaries agree.
So, there's a property worth £400k with the OP due to receive 50% and the two brothers to receive 25% each.
So why not let the OP get a £200k mortgage and gift £100k each to the two brothers as a PET and then assent the house to the OP?
No SDLT to pay on the assent and, as long as the OP lives for another seven years, no tax to pay on the gifts to the brothers.0 -
Now I'm really confused.
I would have thought this would have been a relatively simple question for a solicitor to answer but I've just contacted ours and he says that the property could be transferred to me from the estate by the executors (of which I'm one) via a deed of assent and he 'does not think' stamp duty would apply to that transaction.
I didn't like the 'does not think' part and all seemed a bit unsure so I'm going to need to call HMRC or some other solicitors next week for clarification.0 -
This is where that approach falls down:Now I'm really confused.
I would have thought this would have been a relatively simple question for a solicitor to answer but I've just contacted ours and he says that the property could be transferred to me from the estate by the executors (of which I'm one) via a deed of assent and he 'does not think' stamp duty would apply to that transaction.
I didn't like the 'does not think' part and all seemed a bit unsure so I'm going to need to call HMRC or some other solicitors next week for clarification.
'Property left to you in a will is almost always exempt from SDLT. This includes property that has outstanding debt on it, for example a mortgage.
It also applies to a transaction that changes the terms of a will within 2 years of someone dying. The transaction is exempt from SDLT as long as:- a different beneficiary gets the property
- the new beneficiary doesn’t pay a compensation payment, this includes taking over a mortgage'
https://www.gov.uk/guidance/stamp-duty-land-tax-transactions-that-dont-need-a-return0
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