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Joshua
Joshua, Lawyer
Category: UK Property Law
Satisfied Customers: 24527
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Hello, I wonder if you can advise me. My mum passed away

Resolved Question:

Hello,

I wonder if you can advise me.

My mum passed away recently and in her will has left her estate to be divided equally between myself, my brother and my sister (my dad passed away over thirty years ago).

The estate basically consists of her house (on which there is no mortgage), the contents of the house (nothing of any value) and a few thousand pounds in the bank.

Basically I would like to buy my brother and sister's share of the house and they have agreed to this. I am getting a RICS approved home survey and valuation, and we will use this as a basis
for negotiating the price. However we have had a previous valuation from an estate agent and they indicated that the house is worth around 325K.

From discussion with the solicitor handling my mum's will, we should not need to be concerned about inheritance tax as the house would have passed to my mum when my dad died so would include my dad's inheritance tax allowance (just to clarify, they were married).

My brother is sorting out probate.

So really I just want to check that I have all the bases covered on the aspects of the sale and I am right in the following assumptions:

1. We would not need to be concerned about inheritance tax as mentioned above.

2. I would not need to pay any Capital Gains Tax (CGT) myself, but my brother and sister would if the value of the house went up between the time of my mothers death and the point at which I buy it.

3. I would need to pay stamp duty, but from what I have read am not clear if this is as a percentage of what I am paying to buy my brother and sister out, or if it is on the total value of the house (this would obviously make a difference as the former would likely be in the 1% stamp duty band, whilst the latter is in the 3% band).

I would use a solicitor to handle the transaction and deal with the necessary land registration etc.

Is there anything major I am missing on this ?

Many thanks,

Dave
Submitted: 11 months ago.
Category: UK Property Law
Expert:  Joshua replied 11 months ago.

Joshua :

Thanks for your question. Please kindly RATE my answer when you are satisfied

Joshua :

Do you have an idea of the price you are prepared to pay please? I appreciate you are awaiting the RICS valuation.

Customer:

Hi Joshua, I would expect to pay my brother and sister around 105000 to 110000 each.

Joshua :

Thanks. I will try to deal with your questions using their original numbering in your question for clarity with your permission.

Customer:

thats fine thanks

Joshua :

1. Based on the figures you quote on the basis your father left everything to your mother or near enough there should be no IHT to pay.

Customer:

ok thanks

Joshua :

2. CGT is chargeable on the difference between the probate valuation used for the property and the price it sells for (or you buy out your siblings shares). If probate has not yet been applied for if you have plenty of unused IHT allowance then consider using a higher valuation for probate purposes in order that this is not an issue. If you agree a higher figure than the probate valuation shortly after your mothers passing you can consider using the CG35 procedure to revalue the property for the purposes of CGT so none is payable.

Customer:

ok thanks, XXXXX XXXXX thought we would just have to accept the valuation given by the survey

Joshua :

3. You will have to pay stamp duty on the price you agree for the property less the share you already own under the will. Ideally therefore try if you can to pay no more than £250K altogether for the other shares to keep duty to 1% of that value.

Joshua :

When negotiating a price consider factoring in that your siblings will be avoiding estate agents fees and more significant legal fees on selling to a third party and further monies if the sale is to be quick so they get their money without delay. This may enable you to leverage a discount as although they are siblings you are entitled to negotiate on a commercial basis.

Joshua :

Is there anything above I can clarify for you?

Customer:

Thanks. I am making an assumption here, but I have a good relationship with my siblings and if the RICS valuation came back at say 325000 I would imgaine that they would be happy with say me paying them around 105000 - 108000 each

Customer:

That is very helpful, but I just wanted to check that there aren't any major items in terms of cost/tax etc that I might have overlooked

Joshua :

On that assumption given the above points I would suggest that the lower end rather than the upper end might be justified. Remember one also rarely gets the asking price when marketing through an agent. Ultimately as long as you are happy with the price you are paying that is all that matters.

Joshua :

Is there anything above I can clarify for you any further?

Customer:

Just one other question if thats ok - can I just use one solicitor to manage the whole transaction or should we have one representing my brother and sister as sellers and one representing me as buyer ?

Joshua :

Providing all of you are happy to use one solicitor then because you are all family you can if the solicitor is happy that there is no conflict of interest. However it is up to the solicitor whether to accept instructions on that basis. Since our regulator changed the solicitors code of conduct it has made it much more vague as to when a solicitor can so act and not. Providing the solicitor is prepared to act on that basis that is fine.

Joshua :

Does the above answer all your questions or is there anything I can clarify or help with any further?

Customer:

No I think thats about it - thanks for your help.

Joshua :

A pleasure. If I can assist any further as the situation develops please do no hesitate to let me know.

Customer:

thank you

Joshua :

If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with though please reply back to me though.

Joshua, Lawyer
Category: UK Property Law
Satisfied Customers: 24527
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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