Don't want to inherit house

[HouseD]

Not sure whether to post this in ethical matters, legal matters or money.

My parents have some land in their home country over 6000 miles away. I have only been to that country once and have no intention of living there, my life is here. My parents have decided to build a house on that land, which I am to inherit. For background, prior to building the house my parents asked whether this is something I would like and I made it very clear that this is not something I would want, but they decided that this is something I must have.

I am very concerned about the impact this might have on my family and me, and was hoping someone might be able to help me with the following questions.

1. If once I inherit the house I decide to buy a property here, will I need to pay the higher rate stamp duty?

1. Can my parents give the house to my son, without my consent?

1. My parents receive housing benefit, are they allowed to do so if they own a house elsewhere? If not, if I inherit the house will I get into trouble for their benefit fraud?

1. Can I reject the inheritance, and if so, what happens then? I am an only child.

The house and the land combined are probably worth around £20k. The house is in an area that people are leaving because of poor investment in the area by the government. It's practically deserted. The house itself, whilst new, is probably not desirable due to size and build quality, so I would have a hard time selling it. To sell I would need to be in the country in person.

You can disclaim it, you can Google this, maybe look up the laws for that particular country. Where do your parents live permanently.

1. Yes. If you own or have ever owned a property in the UK or abroad you are not eligible for the relief for first time buyers. However, if your valuation of the house and land is correct, you would be better off accepting the gift and selling it. The proceeds would be around four times as much as the maximum relief for first time buyers, so you would be substantially up on the deal.

1. Yes they can.

1. If they own a house anywhere in the world they must declare it. It may result in them losing housing benefit. Indeed, even without the house being built, given that the completed house and land will be worth around £20k they may already be over the limit of £10k capital beyond which the benefit starts to reduce. You will not get into trouble even if they are guilty of benefit fraud.

1. You can reject the inheritance. What happens then depends on how you reject it. You need to take advice at the time. One option would be to vary the will, in which case you would decide who got the house.

Thank you. Both my parents and I are permanent UK residents. I worry that they will give the house to my son and if that will then create problems for him in the future. He is only a baby right now. We bought a house recently but we may move in the future by selling our current property and buying a new one. If we do, given current property prices I expect we would be looking at paying around 650k for the next house.

My parents did not have capital and savings exceeding 10k, however, my mother's sister agreed to give them some money to build a house with the view that she could live in it rent free. Legally the deeds show that the house belongs to my mother fully.

@prh47bridge I believe given that we are blt first time buyers we are not eligible for any relief therefore we would be worse off?

If my parents are committing benefits fraud and it comes to light after they pass away, will I have to repay it?

I hope I don't come across cold hearted. I have explained some of these issues to my parents several times but they are not listening to me. I told them I would rather have the money than a house and land but they have chosen to build a house for me instead. The potential problems that this could cause is worrying me very much particularly as there is a requirement for me to be in the country in person to deal with these issues when the time comes, and I don't speak the language. I just don't see how this will benefit me, I only see risks and problems and so I'm trying to protect myself.

If it comes to light that they've been committing benefit fraud it would have to be paid back out of their estate

I believe given that we are blt first time buyers we are not eligible for any relief therefore we would be worse off?

I obviously didn't explain this well enough.

If you don't inherit this house you will be a first time buyer when you purchase a property in the UK. You will therefore be eligible for relief on the stamp duty. If you buy a property for between £300k and £500k you will receive the maximum amount of relief, which means your stamp duty will be reduced by £5,000. Note that if you buy a property for less than £300k the reduction in stamp duty will be smaller.

If you inherit the house from your parents you will no longer receive the stamp duty relief so buying a house will cost you £5,000 more. However, you will be able to sell the house you've inherited for £20,000. So, despite missing out on the first time buyer relief, you will be £15,000 better off than if you hadn't inherited.

Just to add, Sugarplumfairy65 is right that, if your parents commit benefit fraud, the DWP may claim it back out of the estate. If the estate has already been distributed they could claim it back from the recipients. But you won't be in trouble - they can't prosecute you for benefit fraud.

Thank you, sorry I am still confused. We bought a house recently in the UK. If we inherit this house, and then say 5 years later we decide to sell our UK house and buy another one, would we be classed as first time buyers? My understanding was this would not be the case, so taking eg a 650k house, we would have pay an additional 3% or 19.5k in stamp duty, which is roughly equivalent value of the house and land abroad.

If my son inherits the house instead, if he then buys his first house in the UK it sounds like he won't get the first time buyers relief, and he will also have to pay stamp duty.

If after my parents pass away it comes to light that my parents claimed benefits that they were not eligible for, will the DWP expect me to deal with the sale of the house abroad to repay them or can I just hand it over to them? I don't want to deal with the time, expense and stress of selling the house.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachmentdata/file/759714/StamppDutyLanddTaxrelieffforfirstttimebuyerss-guidanceenote.pdf

No. You already own a house in the uk so you are not a first time buyer when you buy another house.

If you have already bought a house you will never again be a first time buyer. Yes , DWP.would expect you deal with the sale of the house.

If your son owns a house then he is not a first time buyer either. But, as a pp said above, the stamp duty relief is about £5000. The house is worth £20000. So if he sells the house and uses that money he is still much better off.

we inherit this house, and then say 5 years later we decide to sell our UK house and buy another one, would we be classed as first time buyers?

How are you even thinking you would be first time buyers?? You have already bought a house??

Are you talking about second homes? If so, I believe you are taxed differently based on main residence which would be where you live

I think people are misunderstanding your question OP. A quick google tells me that if you own a property abroad you would be liable for the 3% stamp duty surcharge when you move house in the UK.

OP, are you thinking of the second home rules, rather than first time buyer?

Sorry I am very confused. I didn't think that I was eligible for first time buyers relief but @prh47bridge talked about this in an earlier post. I also don't understand the stamp duty relief, could someone explain? From what I googled I think I am not eligible for any relief. If my son inherits the house abroad, and then purchases his first property in the UK, how would the relief work? From the HMRC guidance I posted earlier, page 7 seems to say if he has inherited then he is no longer classed as a first time buyer.

When you inherit this house what you can do is appoint a representative in the country to sell it (and price it to sell quickly) - less return but zero hassle/involvement for you

Just realised your son is just a baby. You are way overthinking this!

There's no guarantee that there will still be first time buyer relief once your son is old enough to buy his own house. You are massively overthinking this, you and your son would both be better off financially by inheriting than not inheriting.

It sounds like most of the other stuff could be sorted out by alerting the authorities to your parents ownership of the house now so any fraud is dealt with whilst they are alive, but I understand why you wouldn't be in a rush to do that.

I have some good news for you. Sleepingdragon is wrong about the effect of owning a property abroad.

If you sell or give away your main home the higher rate for an additional home does not apply even if you own another property. So, on the assumption you will be buying because you are moving house, the charge would not apply. It only applies if you own another property AND you have not sold your main home. Of course, if you were buying another property in the UK without selling your current home the higher rate would apply regardless of whether or not you own a property abroad.

Note that, for the purposes of calculating stamp duty, it makes no difference whether the property abroad belongs to you or your son. You are correct that if he inherits the property he will not qualify for the relief for first time buyers. However, as per my previous posts, the property would be worth more than the relief. Unless the value of the property collapses or the government substantially increases the value of the first time buyer relief, he would be able to sell the property when the time comes, pay the additional stamp duty and still have money left over.

If after my parents pass away it comes to light that my parents claimed benefits that they were not eligible for, will the DWP expect me to deal with the sale of the house abroad to repay them or can I just hand it over to them

If DWP make a claim against the estate before it is distributed it will be dealt with by the executors. The DWP will only come to you if the estate has already been distributed. If there is any doubt make sure the executors contact the DWP and wait until the DWP have finished their enquiries before distributing the estate.

Thank you, that is reassuring. I hadn't considered having a representative sell on my behalf so something else to consider. The land is in a war zone and my parents have been trying to sell it for years but no one wanted it, so they built a house on it instead. My parents do not own anything else so there will be nothing else in their estate when they pass away. Even if I get only 1k for it to pass on to the DWP to repay the benefits I will be happy if it won't create any further issues for me.

Can you take money out of that country?

My MIL is proudly bequeathing DH her house but it is on an island a long haul flight away and you can’t take money out.

That's a really good point @SW16. I just checked, I can take money out but not all of it in one go so will take a few years.

I can sort of understand your MIL. My parents have built a house which they have no intention of living in or visiting again, and is likely to stay empty!

My MIL does at least live in her house. But it was bought with the proceeds of her house in London. Had she rented out her London house, where rents are shy high) and used that money to build or rent when she went back’ (where rent and build costs are small) she would have had so much more to live on.

It’s a shame: your parents are potentially throwing good money after bad, really.

Hello all, a lot of people gave good advice so I thought I would update the thread.

1. My parents received half the money to build the house from my aunt, but had the deeds in their name only. Aunt now wants to be legally recognised for part ownership, which my mother does not agree with (some twisted logic about my aunt having received the money from their parents, and therefore the money also belongs to my mother).

1. The house has been built to their specification, but now that they see it in real life, they don't like it. For example, the living room is 5m x 2m so looks like a hallway. We also have some safety concerns after seeing pictures eg there is a wall socket inside the shower!

1. The house has been furnished but no one is living in it. It has been broken into a few times and expensive things stolen eg electricity generators.

1. My parents have admitted that they are claiming housing benefit by not declaring the house.

So, to resolve for all these issues, my parents have decided to sell the house. They have had only 1 offer in 1.5 years for less than £10k, but now feel it's worth £50k, so are holding out.

Once sold, their plan is to build another house on the land right next to it, which they also own!!! The intention is to have it as insurance in case they ever need to move there, and my son will inherit it.

Under current regulations, we would then have to go to the country in person to claim the inheritance, at which point we will need to pay a tax of 100% of the value of the property as we are not citizens.

What a waste of time, money and energy, but hopefully will never be my problem.

I remember your thread. As you say a complete waste of money & resoucrs. Not to mention a damaged relationship with your aunt, legal and ethical issues!

What makes them think it's worth £50k?

I don't know how they came up with £50k but I think they are being delusional. They bought a car brand new 20 years ago for £8k and believe it's still worth that much because they have maintained it well, and will only sell it for £8k.

My parents are probably adding up the cost of travel, accommodation etc that they will incurred in order to build the house, plus profit. They seem to be ignoring that the house they have built is in an area that has been deserted with many houses on their street, much bigger and nicer, literally standing empty because no one wants to live there or buy there.