Stamp duty on inherited property with a mortgage

[mdlmango]

Hello,

I have inherited a property worth £435,000 that has a mortgage of £178,000. Do I need to pay stamp duty and if so how much?

Many thanks

[maths]

No, whether mortgaged or not.

[mdlmango]

Thank you for your reply.

Would you be able to tell me why this is so?

I've been to two solicitors and one has quoted £6k for stamp duty and the other has quoted £1k.

Many thanks

[maths]

I stand to be corrected but cite Finance Act 2003 Schedule 3 paragraph 3A as justifying no SDLT.

Or wait for other contributors to this site.

[mdlmango]

Is this what you're talking about from the Finance Act 2003?:

Variation of testamentary dispositions etc
4(1)A transaction following a person’s death that varies a disposition (whether effected by will, under the law relating to intestacy or otherwise) of property of which the deceased was competent to dispose is exempt from charge if the following conditions are met.
(2)The conditions are—

(a)that the transaction is carried out within the period of two years after a person’s death, and

(b)that no consideration in money or money’s worth other than the making of a variation of another such disposition is given for it.

(3)This paragraph applies whether or not the administration of the estate is complete or the property has been distributed in accordance with the original dispositions.

[maths]

No.

FA 2003 Sch 3 PARAGRAPH 3A "Assents and Appropriations" not paragraph 4 to which you refer.

[maths]

Assents and appropriations by personal representatives

(1)In Schedule 3 to the Finance Act 2003 (c. 14) (stamp duty land tax: transactions exempt from charge), after paragraph 3 insert—

“Assents and appropriations by personal representatives
3A(1)The acquisition of property by a person in or towards satisfaction of his entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person, is exempt from charge.
(2)Sub-paragraph (1) does not apply if the person acquiring the property gives any consideration for it, other than the assumption of secured debt.
(3)Where sub-paragraph (1) does not apply because of sub-paragraph (2), the chargeable consideration for the transaction is determined in accordance with paragraph 8A(1) of Schedule 4.
(4)In this paragraph—
“debt” means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date, and
“secured debt” means debt that, immediately after the death of the deceased person, is secured on the property.”.
(2)The amendment made by this section is deemed always to have had effect.

[mdlmango]

Thank you Maths!

[mdlmango]

When it says:

"secured debt” means debt that, immediately after the death of the deceased person, is secured on the property.”.

The exemption of stamp duty doesn't apply if the mortgage is offered years after the death?

[maths]

By inheriting a property which is mortgaged the inheritor is effectively providing consideration and hence a SDLT charge would normally apply.

However, exemption is granted if the mortgage (ie debt) is secured against the property at the time of death.