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Original poster

Stamp duty and inheriting a house

16 replies

Trethew · 30/12/2018 19:33

My grown up children will be inheriting a share of their grandfather’s house which will be sold once he has died, so they will receive a share of the cash proceeds. They do not own property already.

When they come to buy their own house will this mean they cannot be classed as first-time buyers for Help to Buy? Will they lose the £300k stamp duty exemption available for first time buyers?

OP posts:

Lazypuppy · 30/12/2018 22:47

Why are they inheriting a house? Why can't the house be sold as part of probate then just cash is split, that's normally how it happens

Original poster

Trethew · 30/12/2018 23:53

The house is left to the six grandchildren who will sell it. But will the fact that they have inherited property (albeit a small share of one house) mean the are or have been a property owner

OP posts:

IMissGin · 30/12/2018 23:55

The estate owns it then it’s sold and the estate is made up of cash which is shared. They would only own the house if they decide not to sell but rent out or similar

titchy · 30/12/2018 23:57

What others said - they will never own the house. The estate will own it, sell it then distribute the proceeds.

StylishMummy · 31/12/2018 10:20

First time 'buyer'

They've never bought a house or had a mortgage so they're good from that perspective. (Mortgage adviser here)

Shelley54 · 01/01/2019 12:51

^ bad (or at least incomplete) advice there.

While they may still be entitled to FTB mortgage deals, if they have a beneficial interest in a property then they will not benefit from the FTB stamp duty allowances. I believe their share would need to be worth over £40k to affect their stamp duty situation. And as said above, if it’s sold through probate and they receive cash once the estate is wound up, then it may not be an issue at all.

BirdIsland · 01/01/2019 13:09

SDLT is horrendously complicated with lots of traps. Your children should obtain some tax advice, as what happens during the admin of the estate (and actually how the property has been left to them) could impact on whether they qualify for relief or not. Remember there is also a 3% surcharge for 'second' homes, so they could run the risk of losing FTB relief and also picking up the surcharge, depending on timings.

VanGoghsDog · 01/01/2019 13:24

If they are under 18 they can't own property anyway, so that would make it a non issue as it would be held in trust for them.

But, like others, I can't see why the executor wouldn't sell it from the estate and they just inherit money.

Seems to me that would be a lot less hassle than six people (max who can legally own a house is four anyway, so that part alone would involve legal wrangling) all trying to agree value and dates etc.

VanGoghsDog · 01/01/2019 13:25

Sorry, just saw you said they are grown up. Are all six over 18?

SheepyFun · 01/01/2019 13:41

It's good you're thinking of this - get legal advice. DH did inherit (part of) his parents house; the deeds were transferred to him and his siblings. We then didn't qualify for the stamp duty exemption; his parents died (well) before such exemptions were made, so it probably hadn't occurred to them or the executors.

Marmight · 01/01/2019 16:37

Only four people can appear on the deeds as owners at the Land Registry so therefore the six grandchildren will not be able to own it collectively before they sell it, unless a trust is set up
For ease, it makes perfect sense for the estate to sell the house once probate is granted and the grandchildren to then inherit the proceeds.

if the will is explicit in saying that the grandchildren must inherit the house, a deed of variation can be done, signed by the grandchildren to change this anyway.

However your post says that they will inherit the house and then once their grandfather has died, it will be sold.

Generally, one has to die before anyone inherits anything.

Is his house being put into their names before he has passed away?

Original poster

Trethew · 01/01/2019 17:49

All grandchildren over18. One already owns a house. Will does not direct that the house is sold and proceeds shared, but leaves the house in equal shares to all surviving grandchildren. We think it will take a while to sell (poor location, bad condition etc). Estimated value now £120k £150k but that’s a guess

OP posts:

Original poster

Trethew · 01/01/2019 17:50

So until it is sold, I think they will all own it

OP posts:

Original poster

Trethew · 01/01/2019 17:55

Thanks marmight. I think we will have to get this sorted professionally. Guess Deed of Variation might be the way forward. Fortunately all six grandchildren are in unison on this

OP posts:

Original poster

Trethew · 01/01/2019 18:05

Thanks everybody

OP posts:

Marmight · 01/01/2019 18:06

On death, the beneficiaries will not 'own' the house. The estate will own the property. It will be the responsibility of the executors to deal with estate.

Once probate has been granted, the house can be put up for sale and sold by the executors and then the proceeds of the sale can be distributed by the executors to the grandchildren. Therefore there will be no need to put the house in all the grandchildren's' names (you can't anyway as too many)

No need for a deed of variation either as the beneficiaries are still getting their share as per the will.

No need to overthink this at all as this is quite a common scenario.

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