1. Jessbow

    Jessbow Registered User

    #1 Jessbow, Mar 13, 2015
    Last edited: Mar 13, 2015
    Mum passed away 9 months ago , My bro and I inherited her bungalow and monies in equal shares.

    In order to keep what was her bungalow insured etc, we put the deeds of the bungalow into our joint names ( his and mine)

    The actual 'pound note' monies remain in the bank, I have executed her will and what is left is to be split between us.

    Now comes the problem

    Example figures....
    Bungalow is in joint name at worth 200k ( example)
    Money in executors acc = 200k

    My brother wants his share of the cash and his share of the bungalow.

    I don't have a problem with either....

    Because the bungalow is in joint names, I have to 'buy him out' with my share from the bank. ( so its as broad as its long , money and bungalow= same value)

    in doing this, I am going to get clobbered for stamp duty!!

    can anyone see a way round this??
     
  2. Kevinl

    Kevinl Registered User

    Aug 24, 2013
    4,776
    Salford
    Stamp Duty is 2% of the amount over £125,000 (and under £250,000) the house sells for and 2% of the £75,000 liability is £1,500 so it's not a clobbering, if he gives you his half of the SD (£750) then you're straight.
    Personally I'd not buy him out, what the house sells for will be subject to a survey, who knows what that might turn up, subsidence, dry rot, who knows what?
    The market has turned and is in decline (in many parts of the country, but not all), are you happy to maybe wait a couple of years them maybe have to drop the price for a sale, alternatively you might get an offer higher than his cash share, will he want half? Too many things may happen, personally I'd split the cash and deal with the house then split the cash from that or I'd take the money and leave the house for him to sort out. Even though they start out simple plans like this can go A over T big time.
    K
     
  3. Beate

    Beate Registered User

    May 21, 2014
    11,742
    Female
    London
    So your brother gets the cash while you get the property? You could ask your brother to give you half the stamp duty to make it even again. On the other hand, stamp duty on your example amount is only £1,500 and the value of the property might go up substantially in the coming years, netting you much more than interest in a bank would do.
     
  4. jugglingmum

    jugglingmum Registered User

    Jan 5, 2014
    5,309
    Female
    Chester
    The only thing I can think of is if you had it in your name's as executor's for your mum's estate, then it is a transfer out of her estate, I've no idea without researching if this attracts stamp duty or not.

    For absolute certainty, you need to take professional advice (from a tax expert in a reputable firm of accountants - or a very good solicitor, not a conveyancing solicitor) as HMRC are very hot on stamp duty evasion, but it may well cost you £500 to £1000 which if you can split it with your brother is not worth worrying about.
     
  5. Jessbow

    Jessbow Registered User

    He wants his share of the money and the house now and I live in it! I cant really tell him to go whistle, can I when in effect I have also inherited enough money to 'buy' his share?

    What saying is this...
    The bungalow value and the cash sum we have in the exec acc are equal- if I take the bungalow and he takes the cash, why does stamp duty come into it?

    we are still splitting the estate 50/50 as per the will
     
  6. Pickles53

    Pickles53 Registered User

    Feb 25, 2014
    2,475
    Radcliffe on Trent
    It's water under the bridge for you and your brother, but I would just say that we were able to keep my mum's bungalow insured as executors just by sending them a copy of her death certificate and switching the direct debit to be paid from our bank account. We still waiting for probate to be granted, but the premiums will be included in the final estate accounts before the residuary estate is divided between all the beneficiaries.

    I don't think that liability for stamp duty can be avoided because of the cash amount. It's payable based on the transaction itself, but I'm not a property lawyer. If it is payable, I think it would fairest for you to split the cost with your brother but he could generous enough to stand the full amount as he will have the cash.
     
  7. mrjelly

    mrjelly Registered User

    Jul 23, 2012
    315
    West Sussex
    No Stamp Duty to pay?

    I am not an expert, but I think there may be no tax to pay.

    If you inherit half the house and half the cash (after IHT), then the value of the property transaction in the buyout will only be £100,000 for your brother's share of the house. I think this is what the HMRC call the "consideration".

    see example 3 on this page: https://www.gov.uk/sdlt-transferring-ownership-of-land-or-property
     
  8. Kevinl

    Kevinl Registered User

    Aug 24, 2013
    4,776
    Salford
    It's a bit clearer now, if you buy out his share for under £125,000 then no stamp duty.
    If you want to continue living there then then yes, buy his share, if you don't want to continue living there and are happy to sell and move on then there is no obligation for you to buy his share although he could ask you for half the going rate for rent as he own half the house and you're living in it.
    When you say "He wants his share of the money and the house now and I live in it! I cant really tell him to go whistle, can I when in effect I have also inherited enough money to 'buy' his share?" other than it may cause friction between you then you can tell him he has to wait, you may well have the money to buy him out but that doesn't mean you have to, as I said earlier what if the house turns out to be worth less than you think, a surveyor may find any number of issues will he pay you back his half.
    K
     
  9. jugglingmum

    jugglingmum Registered User

    Jan 5, 2014
    5,309
    Female
    Chester
    Consideration is 'purchase price' whether cash or other amounts for the full value.

    Having read the example I think this does cover the situation Jessbow described. There was a lot of anti avoidance legislation brought in when stamp duty became SDLT was the reason for my caution last night and not having the enthusiasm to read HMRC or manuals when not in work.

    I would recommend printing off this example and retaining it with the documents for any query as to why you said no SDLT on the form as one hand of HMRC doesn't always know what the other is doing. I have had instances where I have sent in examples from HMRC manuals to defend my clients position and they have disagreed with it:eek: It should be watertight if it ties in with the example.

    Sorry to sound really cynical HMRC drive me nuts at times.
     
  10. Jessbow

    Jessbow Registered User

    Thanks, The way I am looking at it, it seems unfair that we cannot divide the estate 50/50 in the way that we choose.

    If he wants pound note, and I am happy with the same value in bricks and mortar, no one is 'buying' or selling anything - which is why I don't think stamp duty should come into it.

    The estate is of a considerable size ( figures above were ''for illustration) and the tax man has already had a big bite in terms of inheritance tax.

    *sigh*- can I just have my mum back, dementia and all?
     
  11. Wirralson

    Wirralson Account Closed

    May 30, 2012
    658
    #11 Wirralson, Mar 16, 2015
    Last edited: Mar 17, 2015
    Have you asked your solicitor about a Deed of Variation? This can be probelmantic - all beenficiaries and the executor(s) have to agree, bu it may solve the problem.

    Edited to add: is the property within the scope of the will or is it passing by survivorship?

    W
     
  12. markshaw

    markshaw Account on hold

    Mar 16, 2015
    4
    I thinks it's best to get advice, perhaps CAB?
     
  13. jugglingmum

    jugglingmum Registered User

    Jan 5, 2014
    5,309
    Female
    Chester
    If the sums are considerable, then I suggest you do take professional advice as if you get it wrong the penalties will be considerable as well. HMRC do charge penalties quite quickly in this area.

    A good solicitor will be able to advise on a deed of variation and whether it's possible but it sounds from your post that the issue is more linked to the names the house is registered in.

    Didn't occur to me before, but another thought is that is it in your joint names as owners, or your joint names as nominees for the estate, this may allow you an exemption.
     

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