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question about stamp duty

gocat
gocat Posts: 5,905 Forumite
First Post First Anniversary Mortgage-free Glee!
in House buying, renting & selling
Ok scenerio. 6 siblings inherited mums property.
To be sold and divided by 6
However one sibling has offered to buy 5/6th of property and will be FTB.
one other sibling will buy 1/6th property with their share of the sold property, but is not first time buyer.
How does the stamp duty work out for the one buying 1/6th of the property?
Property worth £300,000

tia :)
«1

Comments

  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    Your fractions don't add up.

    Do you mean they'll end up with one sibling owning 5/6 and the other owning 1/6? In which case the first one is buying out the other 4 siblings, and the other one is just inheriting their 1/6, not buying it?
  • gocat
    gocat Posts: 5,905 Forumite
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    davidmcn wrote: »
    Your fractions don't add up.

    Do you mean they'll end up with one sibling owning 5/6 and the other owning 1/6? In which case the first one is buying out the other 4 siblings, and the other one is just inheriting their 1/6, not buying it?
    Yes thats right. The remaining siblings will have their £50K approx each.
    Is there stamp duty to be paid by the one inheriting the 1/6th?
    I guess the 5/6th ftb wont have to pay stamp duty or have I got that wrong.

    tia :)
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    gocat wrote: »
    Is there stamp duty to be paid by the one inheriting the 1/6th?
    No, you don't pay stamp duty on inheritance.

    The other one gets FTB relief so doesn't pay any SDLT (assuming they're going to use it as their main residence).
  • gocat
    gocat Posts: 5,905 Forumite
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    Thank you for your quick helpful replies. :)
  • G_M
    G_M Posts: 51,977 Forumite
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    Now tht the SDLT issue is answered, can I ask why they've decided on this arrangement?

    Joint ownership going forwards has many potential pitfalls and few benefits.

    Or can sibling B not afford to buy out all 5 of the others?
  • gocat
    gocat Posts: 5,905 Forumite
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    Sibling 5/6th will be staying in the home. Has lived there all his life till his mum died.
    Sibling 1/6th is just helping him out by putting her 1/6th back into the cost of the property.
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    gocat wrote: »
    Sibling 5/6th will be staying in the home. Has lived there all his life till his mum died.
    Sibling 1/6th is just helping him out by putting her 1/6th back into the cost of the property.
    How is the first sibling funding the buy-out from the other siblings? If a mortgage (or if wanting to be able to mortgage the property in the future), bear in mind that both the owners would need to be parties to the mortgage, which may complicate matters.
  • gocat
    gocat Posts: 5,905 Forumite
    First Post First Anniversary Mortgage-free Glee!
    davidmcn wrote: »
    How is the first sibling funding the buy-out from the other siblings? If a mortgage (or if wanting to be able to mortgage the property in the future), bear in mind that both the owners would need to be parties to the mortgage, which may complicate matters.
    Oh didnt know that. Yes first sibling will need a mortgage of £100K (which is ok) and has got deposit of £100k . then his 1/6 and 2nd sibling 1/6 will pay the rest.
    Why does 2nd sib need to be party to the mortgage?
    tia :)
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    gocat wrote: »
    Why does 2nd sib need to be party to the mortgage?
    Because all the owners needs to agree to their property being mortgaged. The lender can't (realistically) repossess and sell 5/6 of a house.
  • G_M
    G_M Posts: 51,977 Forumite
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    Sibling 6 means well but is ill-informed.

    By keeping 1/6th ownership

    a) a joint mortgage wwill be needed witth sibling 1 (who is buying out sibings 2-5)

    b) as sibing 6 will not live there, when the property is sold he'll have to pay Capital Gains Tax on his 1/6th value

    c) if he ever wants to buy a property of his own
    i) he won't qualify for 1st time buyer benefits
    ii) he'll may have to pay 3% additional SDLT as a 2nd home owner

    If sibling 1 cannot afford to buy out all 5 others, why does sibling 6 not simply lend sibling 1 the value of his 1/6th inheritance? He won't actually have tto find any money, he'll simply not reeceive his inheritance till the loan is repaid. Which was the case also if he'd kept ownership of 1/6th of the house.

    Sibling 1 then gets a sole mortgage, owns 100% of the house, pays siblings 2-5 their share, and owes sibing 6 his share to be paid at a later date (eg if he sells the house).
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