Hi,
I wonder if anyone can help advise myself and my siblings regarding SDLT on inherited property. I will try to keep it brief, but there are some complications! Apologies in advance for the essay!
Our Dad died, leaving Sibling C as the sole benefactor and executor of his estate. Sibling C felt that the only right thing to do was to redistribute the estate equally between all 3 children. However, Dad was insistent that the flat should remain in the family.
It was decided that sibling C would keep the flat, releasing equity to siblings A & B via a deed of variation. Sibling C's solicitor pointed out that Sibling C was taking a risk by having an additional mortgage, and the amount of equity to be released to Siblings A & B takes this into account.
The solicitor then advised that C would be liable to SDLT by doing a deed of variation, and suggested keeping the flat in C's name, with C releasing the monies to A & B via a gift.
However, Sibling A lives abroad, and would be liable to tax of c£15,600 by doing this (as the gift is from a sibling, if the gift is from a parent A is not liable to tax - which I believe would be the case if a deed of Variation is done).
Probate was granted with the property being valued at £312,000. HMRC investigated this as the value was low for the road - but the house is in a bad state, and accepted the valuation. When C applied for a mortgage, it transpired that the house was un-mortgageable due to the length of time left on the lease. The property was then revalued at £250,000. An application for a rebate on IHT has been made as this brings the estate below the threshold.
As a family we want to do whatever makes the most financial sense - and here is where the SDLT query comes in.
From reading other threads on here it seems that if C did the Deed of Variation, and then "bought out" A & B - C should only be liable to 2/3 of the SDLT (C is not a first time buyer) - so @£312k SDLT = £7,700, @£250k SDLT = £5,883, rather than the full amount (£14,960 and £10,000 respectively).
Neither of C’s solicitors (probate & conveyancing) not his accountant seem prepared to advise how much SDLT is due, (with the added complication of not knowing which value will be used to calculate it) and we are running out of time to get things done.
Any advice will be gratefully received
Many thanks in advance
Bo
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