Inherited property & SPV mortgage

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    Inherited property & SPV mortgage

    Hi, newbie 1st time question so please go easy on my ignorance!!!

    I've got 1 rented property under my personal name and my siblings & I have just inherited a mortgage-free family property.

    They want to sell while I think it's a good opportunity for me to have another rental property.

    So we've agreed that I mortgage the property and use that money to 'buy them out' of their share of the property value.

    Question - if I setup a SPV company and do this via a SPV mortgage, is it still straightforward to pay off my siblings from the mortgage as soon as I get it (e.g. via a director's loan or similar)?

    My concern is that I might be complicating that side of things by using the SPV.

    (Yes I will be making an appointment to speak to an accountant about it too - but i just thought I'd ask the question here to see if anyone has any good suggestions / advice also).

    Thanks in advance.

    #2
    It wouldn't be a loan, it would be an outright purchase from a connected person, so you had better know the market value, if it differs from what you pay.

    Comment


      #3
      Aaah I see. So does that mean I will be liable for SDLT on the money I pay my siblings for their shares of the property?

      Comment


        #4
        You would pay SDLT (but it would be based on the market value, not the amount you agree with your siblings).
        Because you own a property already, the SDLT will include a 3% surcharge.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Originally posted by jpkeates View Post
          You would pay SDLT (but it would be based on the market value, not the amount you agree with your siblings
          On market value of the whole house?

          Comment


            #6
            Market value of their share.

            Comment


              #7
              Ok so sounds like whether I take ownership of the house via my SPV or in my personal name, there's always going to be SDLT payable on the market value of their shares regardless?

              Comment


                #8
                There is no sdlt for transfer of inheritance property to beneficiary named in the will.

                You may get some help from the executor ?

                Comment


                  #9
                  This isn't a devolution in the will. This is a a transaction for which money is being paid.

                  If there was enough cash in the estate, there could be a deed of variation, that substituted the cash for the share, but I don't see how one could reassign it to the OP, without the original beneficiary losing out, if the cash value cannot be paid from other parts of the estate.

                  Comment


                    #10
                    Originally posted by leaseholder64 View Post
                    ...so you had better know the market value, if it differs from what you pay.
                    I've got a few local EA valuations showing the current market value and the lender have done their pre-lending valuation - do you think all these things combined is enough evidence of market value?

                    Comment


                      #11
                      Yes, I'd have thought so.
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment


                        #12
                        Baracus , the lenders valuer will have been required to provide a minimum of three comparable property sales and the prices achieved together with data on current property being marketed within a 0.25 mile radius of the subject property, in addition they do the same for rental property in order to support the renal assessment. If there is a mismatch then you will need to provide written evidence to support a claim of the property being undervalued.

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