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Where Taxpayers and Advisers Meet

SDLT on inherited property

Paulcox74
Posts:12
Joined:Mon Feb 13, 2017 10:59 pm
SDLT on inherited property

Postby Paulcox74 » Mon Feb 13, 2017 11:12 pm

Hi,

Me and my 3 siblings have inherited my Nan's estate - 25% each. The estate is made of a £250K property and £150K in other investments, so we're effectively entitled to £100K each. I've agreed with my siblings to use my share and some additional to cash to buy the property. This property will not be my main residence and whilst I don't own another property my wife does, so this will be deemed an additional property. Just trying to suss out whether the SDLT surcharge of 3% is payable on the full property value of £250K or just the £150K additional funding from outside the estate?

Thanks for any help

Paul

maths
Posts:8430
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT on inherited property

Postby maths » Tue Feb 14, 2017 3:27 pm

SDLT is charged on chargeable consideration.

In your case you inherited 25% of the property (and 25% of the other investments).

You are proposing to buy the other 75% of the property from your three siblings. SDLT will therefore be charged on what consideration you are paying for the 75%
ie approximately 75% of £250,000 (the source of the consideration from which you purchase the 75% is irrelevant).

AGoodman
Posts:1419
Joined:Fri May 16, 2014 3:47 pm

Re: SDLT on inherited property

Postby AGoodman » Tue Feb 14, 2017 4:50 pm

If the executors have a power of appropriation, they may be able to appropriate two fifths of the property (£100,000) to you in satisfaction of your share of the estate so that you then only have to buy three fifths (£150,000).

maths
Posts:8430
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT on inherited property

Postby maths » Tue Feb 14, 2017 10:05 pm

Following on from AGoodman's post.

Often will's dispense with any requirement for consents to be obtained as required under AEA 1925 s41 re any power of appropriation.
Even in the absence of any such power being contained in the will, appropriation is possible under AEA 1925.

AGoodman suggests an appropriation of 2/5ths be considered; the 2/5ths arrived at by taking 25% of [250K + 150k] giving 100k (ie 2/5ths of 250k).

In principle this approach would "work" assuming no significant (or possible any) movement in the market value of the property between date of death and date of appropriation. Where an appropriation is made (ie of an interest in the property) the value of the asset is taken at the date of appropriation, not the date of death. Accordingly, any appropriation would need to take into account such movements in the value of the property in which case an allocation of 2/5ths would be inappropriate (assuming, for example, a significant increase in the property's value).

This would be so as the other three beneficiaries interests would be prejudiced and AEA 1925 s41 requires the executors to have regard to such interests.

I have for the purposes of discussion assumed the 150k investments remain at this value.

I would be interested to hear AGoodman's views on this

Paulcox74
Posts:12
Joined:Mon Feb 13, 2017 10:59 pm

Re: SDLT on inherited property

Postby Paulcox74 » Sat Feb 25, 2017 9:25 pm

Thanks both for your responses.

If I were to decide to register the property in mine and my wife's name would that make any difference to the above outcomes?

maths
Posts:8430
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT on inherited property

Postby maths » Sat Feb 25, 2017 10:09 pm

If I were to decide to register the property in mine and my wife's name would that make any difference to the above outcomes?
No.

AGoodman
Posts:1419
Joined:Fri May 16, 2014 3:47 pm

Re: SDLT on inherited property

Postby AGoodman » Fri Mar 03, 2017 4:37 pm

I agree re: appropriation value. If it was carried out at the end of the estate administration (which would be sensible), values should also be available for the rest of the net residue as that will effect the value that can be appropriated (ie if the investments were realised at a loss, 25% of the estate would be worth less and vice versa).


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