Inherited Property with 2 siblings in 2010 - I want to buy my sister's 3rd. pitfalls?

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    Inherited Property with 2 siblings in 2010 - I want to buy my sister's 3rd. pitfalls?

    I own a property with my brother and sister. We each inherited a third
    share when we lost our parents. My sister wants to sell her share and
    enjoy her inheritance. I have the funds to buy her out so she and I are
    quite happy with that. What are the implications for her being bought out now? Capital Gains? Implications for my brother, whom I am get on with
    really well ie he wont be concerned (I don't think) that I will own 2/3rds. Any advice would be really welcome. Thanks

    #2
    Presumably the property was left initially by one parent to the other and then when you lost the survivor it came to the three of you? Was a value at that time agreed for probate purposes? - in which case that would normally be the amount of your combined "cost" for capital gains tax. Your sister would have one third of that as her individual cost and to the extent that you buy her out for more, she makes a capital gain.

    Has the property actually increased in value since 2010? If so, is your sister's share of the increase more than the £10,600 capital gains tax annual exemption? If it is more, if she's married she could gift half of her share to her husband before both of them selling to you, in order to also use his CGT exemption.

    I can't think of any tax consequences for your brother.

    Comment


      #3
      Additionally, SDLT will have to be paid at the appropriate rate. If the value of the one-third share is less than £125,000 then there will be no SDLT. Based on the value of the one-third share, not the value of the entire property.

      http://www.hmrc.gov.uk/sdlt/intro/rates-thresholds.htm

      If CGT is due then you will be well-advised to obtain a formal valuation.

      If the gain is more than she (and any husband/civil partner) can absorb, then you could do the sale across two (or more) tax years in order to access additional annual exempt amounts (of 10,600)

      Comment

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