First time buyer/stamp duty query - inheritance

[pyjamas89]

Hello
I'm hoping someone may have knowledge to help or at least point me to some guidance about my query. When I've looked online it's very confusing - I have asked both a tax advisor and solictor who both say the other party should be advising. Not helpful!

My Mum died leaving a house as part of her estate in equal parts to her 3 children. We were all 3 executors, applied for probate, and sold the property as soon as was feasible when this came through. None of us ever lived in the property and the deeds were never in our names.

Am I a first time buyer for stamp duty purposes, or will I need to pay? Everything is phrased as a 'major interest' in a property. I don't understand if inheriting a share in a property as above means I'm inillegible for this relief (if I'm not, fine, that's one of those things!) but obviously I don't want to wrongly declare that I am and everyone I have asked for advice is being unhelpful as they clearly don't want liability.

If anyone can direct me to any clarifying information I'd be msot grateful.

I would check directly with HMRC

Everything I can see online (including HMRC advice) is that you will have lost your first time buyer status, which seems ridiculous!

As PP said, just contact HRMC but a quick Google search provides this:

You won’t pay stamp duty if you inherit a property in a will – even if you’re taking on an outstanding mortgage. However, you may need to pay inheritance tax, and inheriting a property (or even a portion of a property) will mean you lose your first-time buyer status if you buy a property at a later date.

www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09795 Please see HMRC manuals for guidance on this exact point.

If you want specialist advice on SDLT I can DM you. I work for a law firm and we have an SDLT team but minimum fee is £1500 +VAT. It's expensive because not many people do it ( as you have found.) And before anyone asks that's not London pricing.

In my opinion you are overthinking this. You didn't ever own part of the property? Your parent left their estate - including their property - to their three children. The estate was liquidated and distributed. Instead of accepting the house as an inheritance (and putting the deeds into your names) it was sold and you accepted the money.

That's my take on it anyway.

IANAL

These people (solicitors, regulated by SRA) say "A person is disqualified from being a first-time buyer if they have acquired a property (or a share in one) by gift or by inheritance as well as by purchase". Advice dated June 2023

But check with HMRC, you have nothing to lose.

I agree with this

I jointly inherited our parents property and never owned the property as it was sold as part of their estate and the proceeds then distributed.

My name was never on the deeds.

Tricky. I have no expertise in this field.

The property was sold after your mum died. Ownership went from your mum to whoever bought the property from her estate.

When did you ever actually own the property? Or have your name on the deeds / mortgage? Did mum leave the property to her children and the children decided to sell?

I think from what you've said mums estate was divided after selling her assets, so you received money, not a property, albeit money was from the property (and possibly other assets) sale.

I agree with crockoshite. You, as executors, acted as Personal Representatives of your mother. The PR sold the property on her behalf. The property was never transferred to you, your names never appeared on the deeds, it was never logged with HMLR. You never acquired an interest in it.
But IAMNAL !

I'm surprised that nobody will advise. This must be fairly common.

The property belonged to the estate, not you. You are a first time buyer.

According to HMRC, inheriting a share in a residential property, regardless of whether you lived there or how quickly it was sold, means you have previously owned an interest in a dwelling. This disqualifies you from being considered a first-time buyer when purchasing your own property later.

Therefore, despite not residing in the inherited property and its immediate sale, you would not be eligible for first-time buyer relief on SDLT for your own property purchase.

*To add, DH was in this exact situation very recently and was advised by a probate lawyer.

Yes I agree.

You inherited money not a property as the executors sold it before passing it to beneficiaries.

If anyone can find something to say the executors lose first time buyer status by doing their jobs that's a different thing (and I doubt that would happen)

So I'd do the forms as a first time buyer and argue the toss if hmrc query it (assuming you got cash and not any share of a house given to you)

I think this comes down to how the estate was administered. Did the executors sell the property so that you just inherited cash? And did the will just say you get X% of the estate? I think that might be fine as you never took an interest in the property (as you could have been paid out your share in non property assets for example).

However if you as beneficiaries sold the property then you wouldn’t get the relief.

@WYorkshireRose

But they didn't inherit a house.

There was a house in the estate which was sold and became cash. That cash was inherited.
The mum and then the estate owner the cash. Never the kids.

(Imagine if no kids but say 10-20 nephews nieces- some aunt dies and her house is sold and money given out via rules of intestacy. You'd not argue any of them owned any interest in the property?)

They would have a a share if! They transferred the house into their 3 names then say rented it out or then sold it. In that case they'd not be first time buyers.

None of what you're saying makes any difference, legally. I understand your logic, but as I said we were in exactly this situation earlier this year with DH inheriting a share of a family member’s estate (which included a property), along with his siblings. We already own our home so irrelevant to us, but DHs brother didn't and this is the advice the solicitor gave.

But legally they didn't inherit it.

They received cash.

They as beneficiaries were never legal owners of the property. Their mum was. Then the estate then purchaser.

So I think your solicitor advised incorrectly here. (Maybe was a passing comment rather than specific legal written advice to a stamp duty query)

It depends if the property is assented to you or not. If the property is part of the estate, it is not your property. But if you have it assented to you, it is then your property and you are no longer a first time buyer.

It depends on wording in the will. If it says I leave my home 5 Pepper Cottage to my children in equal shares then yes that would indicate property ownership. But if worded as something like after payment of pecuniary legacies and my jewellery etc to various beneficiaries I leave my residuary estate to my children in equal shares then no you won't have owned a property. The executor will sell all assets, pay debts and hand over cash. This is the usual scenario.

This is a page I found after trawling HMLR. It seems to imply it's a simple
(a) beneficiaries get it, or
(b) it gets sold to someone else.

There is never any mention of the executors having ownership.