How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Nicola-mod Your Own Question
Nicola-mod, Moderator
Category: Tax
Satisfied Customers: 21
Experience:  Moderator
Type Your Tax Question Here...
Nicola-mod is online now

I'm buying a house. My wife inherited 25% of a property

Customer Question

Hi, I'm buying a house. My wife inherited 25% of a property about 4 years ago. Normally I understand this would mean I pay increased stamp duty as we aren't selling it. However the stake in the house is worth less than 40k which I read on the hmrc website might mean it doesn't count as a second home. I looked on the title deed and it doesn't mention the split (tenants in common). The default split would mean 33% as there are 3 people on the deed, there is a chance this would push it over 40k threshold. Will this matter to hmrc? Does the 40k threshold even apply in our case? How would I prove to hmrc the real allocation and the value of the property?ThanksNick
Submitted: 1 year ago.
Category: Tax
Expert: replied 1 year ago.

Thank you for your question.

This is relevant to your scenario ....


Married couples & civil partnerships

For the purpose of property ownership, married couples and civil partnerships are seen as one unit. This means that if one person already owns a property, any subsequent residential purchase by either person will be seen as an additional property for both individuals.

Married couples living separately, who are separated in circumstances that are likely to be permanent, will now be treated individually and not as one unit.

Inherited property

Stamp Duty does not apply to inherited property so there is no SDLT to pay. If someone who has inherited a property then goes on to purchase another home this could be counted as an additional property.

If however someone has inherited a small share (50% or less) in a single property within 36 months prior to purchasing a new property, they should not be liable for the higher SDLT rate.

This exemption has been introduced to provide flexibility for purchasers who may find it difficult to dispose of a share in an inherited property.

You say your wife inherited 25% of a property about 4 years ago (more than 36 months prior to purchasing a new property).

More information on this can be found here

Having considered both aforementioned points, it appears you would be liable to additional 3% stamp duty. I am sorry if this is not what you expected.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.
How about this example?Example 36:
G currently owns a property worth less than £40,000 which he does not intend to sell. He decides to purchase another residential property. At the end of the day of transaction, he is deemed to own one residential property as his ownership of the property worth less than £40,000 is not taken into account. Therefore, the higher rates will not apply.
Customer: replied 1 year ago.
The inherited house was last valued at 90k
Expert: replied 1 year ago.

Thank you for your reply..

You won’t have to pay the additional stamp duty on homes worth less than £40,000, or on caravans, mobile homes or houseboats.

This does not apply to the property your wife inherited about 4 years ago but would apply if you were to buy a house worth less than £40k.

From 1 April 2016 the rates for Stamp Duty Land Tax (SDLT) will be higher if you buy an additional residential property for £40,000 or more in England, Wales and Northern Ireland.

look at this here

I hope this is helpful.

Customer: replied 1 year ago.
Thanks but on this page: 36 says it works both ways in that purchased and existing properties have a 40k threshold? I agree that if it's the whole house value not the share in the property the I will have to pay the extra. I know it's not Gospel but I first saw it here:Even if you already own just a share in another property, it will count (so long the share is worth more than £40,000).
Expert: replied 1 year ago.

Thank you for your reply.

I would refer you to the following from my previous posting link..

What properties aren’t included

You won’t have to pay a higher rate if the additional property is:

  • a caravan, mobile home or houseboat
  • outside England, Wales and Northern Ireland

There are also certain rules which apply when one of your residential properties has been inherited.

I hope this is helpful.

Customer: replied 1 year ago.
But it also says this on the website I posted? Can you explain how this does not apply? ThanksResidential properties, including a tenancy or lease of a residential property, worth less than £40,000 will not be taken into account when determining if an additional residential property is being purchased.
Expert: replied 1 year ago.

I would like you to read Chapter 3 here

The higher rates will apply to the purchase of a major interest in a

single dwelling by an individual, if at the end of the day of purchase

Conditions A to D are met.

I hope this is helpful

Customer: replied 1 year ago.
Thanks v much for the link. Sorry for dragging this out but does this not apply. For the condition to be met 40k and not more than... It is under 40k so that's not met?Condition C is that the individual purchaser owns, or is treated as owning, a major
interest in another dwelling at the end of the day that is the effective date of the
transaction. That major interest must have a market value of more than £40,000
and not be reversionary on a lease with more than 21 years until expiry11
Expert: replied 1 year ago.

Thank you for your reply.

There is little I can add to what has been said previously. Please look at page 14 dealing with special rules for applying condition C

Expert:  Nicola-mod replied 1 year ago.
It seems the professional has left this conversation. This happens occasionally, and it's usually because the professional thinks that someone else might be a better match for your question. I've been working hard to find a new professional to assist you with your question, but sometimes finding the right professional can take a little longer than expected.
I wonder whether you're OK with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Customer: replied 1 year ago.
I'll wait thanks (can I still get a refund if no one answers?)
Customer: replied 1 year ago.
For anyone who reads this I spoke to hmrc and they say if the value of the share of the existing home is worth under 40k them you do *not* have to pay the extra stamp duty. This disagrees with my lawyer and this advice, seems there is a lot of confusion......
Expert:  Nicola-mod replied 1 year ago.
We will continue to look for a Professional to assist you.
Yes, you can get a refund at any time - just ask here if you would like one.
Thank you for your patience,
Customer: replied 1 year ago.
Sorry I've already asked for a refund and answered my own question as best as I can so don't worry