Probate, stamp duty and first time buyers?

[tethersend]

My brother and I are selling my mum's house as she sadly died a few months ago.

She died intestate and we applied for probate. Our names are not on the deeds, rather we are selling the house as executors.

We will split the proceeds once mortgage etc has been paid off. We are almost at the point of exchange and are both planning to buy our first houses using the money we will inherit from the house sale as a deposit.

Does anyone know if we will count as first time buyers for the purposes of stamp duty?

[amiw]

www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note

[retirednow]

Are you both going to be first time buyers. Sorry to hear about your mum.

[tethersend]

Thanks amiw- I'm not sure if we count as having 'inherited a property' as our names have not and will not go on the deeds.

Thanks for your kind words, retirednow. We are both first time buyers although will be buying separate houses rather than buying one house together!

[GETTINGLIKEMYMOTHER]

I would think you will certainly count as FTBs, if your names have never been on the Land Reg as owners of any property.
My siblings have been responsible for selling a parent's house, but they never owned it as such, they were just executors of the estate. Being an executor does not equal ownership.

[tethersend]

I really hope you're right!

Thanks

[UnimaginativeUser]

Common sense would say that if the house is being sold before probate, is granted, the remaining cash is what her estate is made up of, not the property itself. You would therefore be considered FTB as you've never owned a property.

If the house is transferred to you and your brother on the grant of probate, then sold afterwards, then you would no longer be considered to be a FTB.

Probably worth getting the solicitor dealing with the probate to confirm though.

[tethersend]

Hmm, interesting.

As she died intestate, we applied for and received letters of administration so technically already have probate I think?

The difficulty is that we are both executors of and beneficiaries from her estate. However, the house has not been transferred into our names and nor will it be as it is in the process of being sold. What we inherit will be the proceeds of the sale once everything else is paid off.

[tethersend]

I asked the solicitor we are using for the sale conveyancing and they believe that we don't qualify as FTBs- that as executors of the estate who are able to benefit from the sale, we would have had to technically own the property.

Bugger.

[tethersend]

The question refers to owning an inherited property:

Q13. Can I get relief if I have previously owned an inherited property?

A13. No, if the inherited property was a freehold or leasehold interest in a dwelling.

Interestingly enough, I called the money advice service and their view was that we would qualify as FTBs as we have never owned the property.

I do trust a solicitor over the MAS, but it is so frustratingly confusing.

[retirednow]

Is there a gov.uk site, or land registry - someone like that might be helpful and actually know the right answer.

[MyKingdomForBrie]

You inherited a freehold property - doesn’t matter that your name isn’t down at the Land Reg, you own it. Bloody hard on you but there it is!

[retirednow]

I've been told that until deeds are transferred then the property is still in the name of the deceased even if it is being sold as an executor sale. The Title and Deeds would then transfer from the original owner to the new owner. There's a lot of confusion about all this sort of thing.

[retirednow]

Would it depend on how much the house was sold for? presumably you get half of the proceeds each.

[MyKingdomForBrie]

Ok, so if it’s sold before distribution then it wouldn’t belong to you, it would belong to the separate tax entity that is the estate.

I would challenge your solicitor (an make sure they dont charge you extra for research).

[retirednow]

Do you know whose name the house is in, or who holds the title deeds at the moment.

[GU24Mum]

I'd double check to be honest. You aren't inheriting the property - you are administering the estate and then distributing the sale proceeds according to the intestacy rules. I think what the rules are trying to catch is when you acquire a house ie Great Aunt Ethel leaves you a seaside flat in Bognor - and it is transferred to you - and you decide to sell it to buy a property somewhere else. SDLT rules are complex though so do check!

[tethersend]

This is so helpful, thank you all.

The beneficial interest makes sense. Unfortunately.

[StampDutyLandTaxGeek]

Although you are looking at first time buyers' relief, some of the guidance on the higher rates of SDLT for additional properties is relevant here. See www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf at paras 3.53, 3.58 and 3.59 on when a beneficiary of an estate holding a residential property becomes entitled to a "major interest" in the property. Here is para 3.58:

"3.58 The date of the inheritance for these purposes is the date that the individual becomes entitled to the interest. An interest in an unadministered estate is not a major interest in land and so usually the date the individual acquired the interest is the date the interest is transferred to them. Although, see Capital Gains Manual at CG30700 onwards for the situation where the residue of an estate has been ascertained and the personal representative holds the residue of the estate for the beneficiary absolutely."

A beneficiary often becomes entitled on an "assent" or "appropriation". Sometimes these are made to secure a more favourable capital gains tax treatment. They can have unfavourable consequences for SDLT.

It sounds in your case as if the sale of the property is being made by the personal representatives in the course of administration of the estate without the beneficiaries ever becoming entitled absolutely to the property.

[tethersend]

Have just seen your very detailed reply, SDLTG- thank you very much.

I don't mind admitting that I'm a bit lost by it all!

[LightastheBreeze]

Watching as DS is in the similar situation as he was left money from the sale of DMs house and it is difficult to know if he will be a FTB. Nothing is ever straightforward

[JessB4]

Hi @tethersend, did you end up having to pay SDLT in the end? I am in an almost identical situation but am looking to buy before the letters of administration have been granted and before the house in question is sold.

[ChristopherTracy]

I have been in the same situation and had to pay stamp duty as we did have to to do the house up for 6 months so had to pay stamp duty.

I do think it is unfair that you have to pay stamp duty on that situation when you only may get a small amount from the house sale yet well off people can give their children x and not have any consequences.