Stamp duty on inherited property

I have inherited my mother's house, along with two brothers. I'm going to give them the monetary equivilent of their share each and keep the house. I'll have to arrange a transfer at the land registry I guess and I do expect to pay for that. Will I have to pay stamp duty? The house is worth about 120K and is not in a 'disadvantaged area' in respect of the Finance act, section 92..

Reply to
BrownLF
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I just re-read my posting and it looks like I also inherited my brothers!!. I'd just like to say that thankfully they are old enough to look after themselves so it's actually only the house I'm worried about!

Reply to
BrownLF

On the face of it, it would appear that you and your brothers have each inherited a one-third share worth 40k. It boils down to a question of whether the tax people would view the transaction you propose as (a) you buying a one-third share off one brother (which is below the 60k threshold and hence exempt) and then buying another share off the other brother (which for the same reason is also exempt), or (b) as your brothers jointly selling you their 80k combined share leaving you to pay £800 stamp duty.

Normally, if you try to sell a house in increments each below the

60k limit, the tax people can use the "series of transactions" rules to deem them a single transaction, making the stamp duty payable after all, but what with the shares not coming from the same party, you could be safe, just so long as you formally negotiate with each brother separately and conduct two transfers rather than one.

One way around the problem, if there is one, might be to draw up a deed of variation, whereby their shares of the inheritance are undone, and you inherit the whole house, with their agreement, and you (in a "totally unrelated" gesture of generosity) happen to "gift" them 40k each in return for them giving their agreement. But that could have IHT consequences in respect of your death, should it occur within 7 years.

Drawing up such a deed would involve some legal fees, of course, but they should be much less than the stamp duty saved. It would also save conveyancing fees.

Reply to
Ronald Raygun

"Ronald Raygun" wrote

Tee hee - something "in return" for something else, yet "unrelated" ??!!

Reply to
Tim

Ron, Thanks for your comprehensive reply. I'll look into it further .

Reply to
BrownLF

Quite. A shameless and despicable abuse of quotation marks, for which I make no apology. :-)

The idea is that it should be "unrelated" in the sense that it isn't a straightforward sale of a share of property, which is potentially subject to SD, but rather a negotiated redistribution of an inheritance, which (I presume) is not.

Reply to
Ronald Raygun

A Deed of Variation/Family Arrangement should be exempt from Duty, if executed within 2 years of death.

Reply to
Doug Ramage

In message , Timothy Lee writes

A DoA might not be necessary iof the will merely says "I give everything to those three in equal proportions".

Reply to
john boyle

Exactly. Of course it wouldn't really be a coincidence, the giving of consent to the Deed would be bought. There isn't necessarily anything wrong with that, nor is it clear that it would be construed as a property sale and a mechanism for SD avoidance, which of course it is, but I doubt it would be so "construed" in the sense of being so deemed, with the consequence that the tax would become payable after all.

Reply to
Ronald Raygun

From the original post, I had assumed this is a standard inheritance re-arrangement. As such it is exempt from Stamp Duty. And there is no IHT saving - unless the OP has children and wishes to consider that aspect.

Reply to
Doug Ramage

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