Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Popell
    • By Popell 8th Jan 18, 7:32 PM
    • 9Posts
    • 0Thanks
    Popell
    SDLT on inherited share of property?
    • #1
    • 8th Jan 18, 7:32 PM
    SDLT on inherited share of property? 8th Jan 18 at 7:32 PM
    Hi first post so please feel free to send abuse if this is in wrong section....
    Wifes father has passed away and he had 80% interest in two properties (total worth approx£260k) remaining 20% belong in equal parts to my wife and her sister.
    His wish expressed in his will is for my wife to take his share of the properties and her sis to get equivalent amount in shares. (Calculating value of a share of a property in itself seems a minefield with discounting for probate, tennants in common etc)
    Internet search suggests no SDLT payable for inherited property and indeed I rang the tax office and he has confirmed HOWEVER our solicitors (wife works there as an assistant) have said it is payable.
    The inheritance will give wife 90% share and we may look to buy sisters 10% (also expressed as a wish in the will.
    Whether we do or not will depend on if we can afford to do so.
    Both wife and sister own their own property.
    Any views/advice chaps?
Page 1
    • creditscoremeansnothing
    • By creditscoremeansnothing 8th Jan 18, 7:39 PM
    • 37 Posts
    • 24 Thanks
    creditscoremeansnothing
    • #2
    • 8th Jan 18, 7:39 PM
    • #2
    • 8th Jan 18, 7:39 PM
    Inheritance tax is payable from the estate and as a beneficiary you will NOT pay SDLT.

    However the nil rate band is £325000 including any gifts within the last 7 years prior to death.

    If the total estate is £260k as you suggest then their should not be any inheritance tax either.
    • Popell
    • By Popell 8th Jan 18, 7:46 PM
    • 9 Posts
    • 0 Thanks
    Popell
    • #3
    • 8th Jan 18, 7:46 PM
    • #3
    • 8th Jan 18, 7:46 PM
    Thanks Creditscore.
    Apologies, the value of the two properties is approx£260K. Shares an additional £220kish but he has his deceased wifes allowance re IHT so still under IHT threshold.
    • 00ec25
    • By 00ec25 8th Jan 18, 7:52 PM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    • #4
    • 8th Jan 18, 7:52 PM
    • #4
    • 8th Jan 18, 7:52 PM
    there is no SDLT payable on inherited assets

    however, if your wife subsequently buys out her sister that is classed as a separate transaction and would be subject to SDLT. See example 4:
    https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

    are you sure you know what you are doing? Either the will is utter rubbish or you have misunderstood something.

    The property comprises 80% owned by FIL and 20% owned by your wife

    FIL is now dead. His will left the property to his children: your wife and your SIL.
    The will cannot leave the property to your wife and a "share" to the SIL, that is meaningless.
    You then say that your wife gets 90% and SIL gets 10% but what does that refer to? wife: 80% x 90% and SIL 80% x 10%?
    or
    your wife is to end up owning 90/100 and SIL 10/100?
    Last edited by 00ec25; 08-01-2018 at 8:02 PM.
    • Popell
    • By Popell 8th Jan 18, 8:01 PM
    • 9 Posts
    • 0 Thanks
    Popell
    • #5
    • 8th Jan 18, 8:01 PM
    • #5
    • 8th Jan 18, 8:01 PM
    Sorry 00ec25, I did say send the abuse!!
    I will try to explain myself more clearly
    The two properties are owned thus, 80%FIL, 10%wife, 10% SIL, has been for a number of years (7+)
    Will gives wife option to have his 80% (we have been managing the properties for about 10 years)
    Income from renting was/is split in same proportion.
    The shares I referred to are stocks FTSE etc and make up the 'cash' part of his will. The value of the 80% that wife will take is matched from the cash and given to SIL
    Initially ownership will go to 90wife/10SIL. We may buy out SIL share if we can afford it.
    Thanks again for taking the time to reply, I hope I have made it clearer

    EDit, btw the first line of your response is the bit that seems to be the problem for our solicitor....
    Last edited by Popell; 08-01-2018 at 8:03 PM.
    • 00ec25
    • By 00ec25 8th Jan 18, 8:07 PM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    • #6
    • 8th Jan 18, 8:07 PM
    • #6
    • 8th Jan 18, 8:07 PM
    EDit, btw the first line of your response is the bit that seems to be the problem for our solicitor....
    Originally posted by Popell
    ?

    is this a qualified solicitor?

    https://www.gov.uk/tax-property-money-shares-you-inherit/property

    note that is on inheritance, not on subsequently buying out the share of the other beneficiary
    • Popell
    • By Popell 8th Jan 18, 8:12 PM
    • 9 Posts
    • 0 Thanks
    Popell
    • #7
    • 8th Jan 18, 8:12 PM
    • #7
    • 8th Jan 18, 8:12 PM
    Thanks for the link, yes I found that AND i called to verify but still the solicitor (and the managing partner concurs with him) thinks it is unavoidable and yes, it is a proper firm! Hence my confusion. It may be the way the will is worded (same solicitor did it) but it seems pretty clear from the link you posted

    Thanks again

    Edit, any idea on what proportion SDLT is payable if we but out the SIL's last 10%. Is it 10% or 100% of the market value?
    Last edited by Popell; 08-01-2018 at 8:14 PM. Reason: Cheeky little additional query
    • getmore4less
    • By getmore4less 9th Jan 18, 5:34 AM
    • 32,192 Posts
    • 19,351 Thanks
    getmore4less
    • #8
    • 9th Jan 18, 5:34 AM
    • #8
    • 9th Jan 18, 5:34 AM
    What does the will say.
    actual wording not a summary.

    it is certainly possible to structure a will where one legacy is a property another is the equivelant value(if enough assets) and a residual

    You need to keep good records of values/shares of property as there will be CGT implications.
    • 00ec25
    • By 00ec25 9th Jan 18, 7:43 AM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    • #9
    • 9th Jan 18, 7:43 AM
    • #9
    • 9th Jan 18, 7:43 AM
    Sorry 00ec25, I did say send the abuse!!
    I will try to explain myself more clearly
    The two properties are owned thus, 80%FIL, 10%wife, 10% SIL, has been for a number of years (7+)
    Will gives wife option to have his 80% (we have been managing the properties for about 10 years)
    Income from renting was/is split in same proportion.
    The shares I referred to are stocks FTSE etc and make up the 'cash' part of his will. The value of the 80% that wife will take is matched from the cash and given to SIL
    Initially ownership will go to 90wife/10SIL. We may buy out SIL share if we can afford it.
    Originally posted by Popell
    so the 10% that your wife wants to buy from her sister is nothing at all to do with the inheritance. It is a 10% of the property that the sister already owns and has done for at least 7 years.

    the property will need to be valued at whatever date the 2 of them want to use - that could be the inheritance date if they want. Obviously the valuation will need to be acceptable to both of them as it is crucial to what comes next and should be a realistic market value as it will be used for probate and CGT .

    Wife then pays sister 10% of the value to buy out sister's ownership. That is chargeable consideration for SDLT purposes

    sister is liable for Capital Gains Tax on the 10% she has "disposed of". Sister can claim per CGT allowance and depending on the sums may or may not actually end up paying tax.
    • Popell
    • By Popell 9th Jan 18, 9:00 AM
    • 9 Posts
    • 0 Thanks
    Popell
    Thanks getmore.. salient bit word for word:- 'I direct my trustees as soon as possible to give in writing to my said daughter (wife) the option of purchasing all my beneficial interest in (or the future proceeds of sale of) the properties (details included)'

    I suspect that the intention was as you said
    • Popell
    • By Popell 9th Jan 18, 9:09 AM
    • 9 Posts
    • 0 Thanks
    Popell
    Thanks 00ec25
    Thats exactly the situation.
    I think SIL's husband is more savvy and has mentioned CGT.
    I am about to call the solicitors but in answering getmore..'s message I wonder if having been given the 'option to purchase' is the bit that renders it liable for SDLT. It will be a bit unfair if it is as it was presumably written like that so if when the time came it was not an option then an alternative existed but the FIL clear and stated intention was for wife to get the properties and SIL to take the cash equivalent.
    His will also stated that it was his wish but not binding that SIL sells her interest in properties to wife.
    Ill see how the Solicitor explains it, he cannot blame the way it was written as he did it!
    Thanks again
    • getmore4less
    • By getmore4less 9th Jan 18, 9:39 AM
    • 32,192 Posts
    • 19,351 Thanks
    getmore4less
    Thanks getmore.. salient bit word for word:- 'I direct my trustees as soon as possible to give in writing to my said daughter (wife) the option of purchasing all my beneficial interest in (or the future proceeds of sale of) the properties (details included)'

    I suspect that the intention was as you said
    Originally posted by Popell
    That does not sound like a legacy to me that says she has to buy it which will incur SDLT.


    Who inherits the properties in the will.

    snippits from wills rarely tell the full picture.
    Last edited by getmore4less; 09-01-2018 at 9:41 AM.
    • Popell
    • By Popell 9th Jan 18, 10:15 AM
    • 9 Posts
    • 0 Thanks
    Popell
    That does not sound like a legacy to me that says she has to buy it which will incur SDLT.


    Who inherits the properties in the will.

    snippits from wills rarely tell the full picture.
    Originally posted by getmore4less
    I appreciate this is only a snippet - I can't type well enough to get the entire contents in!!
    I'm not sure if you are saying, do you think she will be liable for SDLT due to the wording in the will?
    Re "who inherits the properties in the will", There is no other mention of the properties in his will other than wife having the option to purchase etc as detailed previously so I guess it would otherwise simply become part of his estate. Will states Trustees shall not sell his share or said properties unless and until wife has refused in writing such right of pre-emption.

    Solicitor not in til 1pm so I'll call him then
    • SDLT Geek
    • By SDLT Geek 9th Jan 18, 9:53 PM
    • 264 Posts
    • 158 Thanks
    SDLT Geek
    I wonder if the Will leaves the residue of his estate to his two daughters: your wife and sister in law? If so it might be worth looking into your wife not taking up the option to buy the 80% share in the property.

    Instead the executors could satisfy the entitlements under the Will by appropriations of assets. If the values work out that could be by appropriating the 80% share in the property to your wife and stocks and shares to the same value to her sister.
    • 00ec25
    • By 00ec25 9th Jan 18, 10:12 PM
    • 6,514 Posts
    • 6,077 Thanks
    00ec25
    Thanks 00ec25
    Thats exactly the situation.
    I think SIL's husband is more savvy and has mentioned CGT.
    I am about to call the solicitors but in answering getmore..'s message I wonder if having been given the 'option to purchase' is the bit that renders it liable for SDLT. It will be a bit unfair if it is as it was presumably written like that so if when the time came it was not an option then an alternative existed but the FIL clear and stated intention was for wife to get the properties and SIL to take the cash equivalent.
    His will also stated that it was his wish but not binding that SIL sells her interest in properties to wife.
    Ill see how the Solicitor explains it, he cannot blame the way it was written as he did it!
    Thanks again
    Originally posted by Popell
    FIL owned 80% of a property
    FIL is dead and the property is part of his estate
    what does the will say about how his estate is to be shared out.

    As SDLT geek says, it might make better context if the estate is to be valued as an entirety and then wife and SIL "fight" over the difference between what 80% of the property is worth in comparison to 50% of the estate. If the property is worth more than 50% then obviously wife needs to pay SIL something to redress the shortfall on SIL's slice of the action.

    if that is the case I can see the benefit of the "option" wording as that then gives wife the first refusal at her having the property but ensures SIL gets money as recompense for not getting the property.

    I'll leave SDLT geek to advise if SDLT would be due in such circumstance where a beneficiary buys out an asset of the estate in lieu of being given money from the liquidation of the estate's assets.
    • SDLT Geek
    • By SDLT Geek 9th Jan 18, 11:33 PM
    • 264 Posts
    • 158 Thanks
    SDLT Geek
    I'll leave SDLT geek to advise if SDLT would be due in such circumstance where a beneficiary buys out an asset of the estate in lieu of being given money from the liquidation of the estate's assets.
    Originally posted by 00ec25
    If a beneficiary puts in their own money from resources outside of the inheritance to obtain a property interest then that outside money is chargeable consideration on which SDLT is due.

    But there is no chargeable consideration if the assets in the estate are sufficient for the value of one sister's entitlement to be met by land and the other sister's by other assets of the estate.
    • Popell
    • By Popell 10th Jan 18, 12:25 AM
    • 9 Posts
    • 0 Thanks
    Popell
    OK, so I've spent an age talking to the solicitor and it is indeed the wording giving the option to purchase that appears to render it subject to SDLT
    Solicitor has mentioned the apportioning bit and perhaps offering some of the saving in SDLT as an incentive to SIL to agree.
    Had a brief chat with the BIL and his position is that they would be very unhappy if the 80% of full market value is discounted due to tenants in common situation.
    Looks like someone is going to end up unhappy regardless of which way it goes.
    SDLT Geek;, if we can get a discounted valuation due to tenants in common then there should be just about enough cash to balance it. If not then I'll be putting cash in so your comments are noted, thank you. That cash may come from a small legacy to which I am beneficiary and the split proceed of an insurance policy to which my wife is beneficiary - if that is the case does this fall within the 'resources outside of the inheritance'?

    Thanks again for the continued help chaps
    • Keep pedalling
    • By Keep pedalling 10th Jan 18, 1:25 AM
    • 5,097 Posts
    • 5,683 Thanks
    Keep pedalling
    If they are in agreement with each other about how to split the inheritace, in a way different to the will they could always get a deed of variation drawn up. It sounds like he wanted an even split, but did not think through the problems doing it this way could cause.
    • getmore4less
    • By getmore4less 10th Jan 18, 11:16 AM
    • 32,192 Posts
    • 19,351 Thanks
    getmore4less
    The standard discounting of valuations is for IHT.

    The reality in a buyout situation where the alternative is to sell then the full market value should be used as the starting point.
    then the discussion centres around the adjustment related to non incurred costs.
    • getmore4less
    • By getmore4less 10th Jan 18, 12:01 PM
    • 32,192 Posts
    • 19,351 Thanks
    getmore4less
    I appreciate this is only a snippet - I can't type well enough to get the entire contents in!!
    I'm not sure if you are saying, do you think she will be liable for SDLT due to the wording in the will?
    Re "who inherits the properties in the will", There is no other mention of the properties in his will other than wife having the option to purchase etc as detailed previously so I guess it would otherwise simply become part of his estate. Will states Trustees shall not sell his share or said properties unless and until wife has refused in writing such right of pre-emption.

    Solicitor not in til 1pm so I'll call him then
    Originally posted by Popell
    if the property is not mentioned anywhere else then it will fall in to the general distribution clause or the residual estate clause.

    What do they say.

    what are the assets totals here(that fall within the estate) we have 80% of the market value of the property and ??????.

    What are the distributions
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

275Posts Today

3,863Users online

Martin's Twitter