Inheritance- buying out a sibling from late parents property
Discussion
I’m looking for peoples experience and tips for buying out a sibling (my sister) from a jointly inherited property.
My sister has no wish to live in the house and is happy for us to move in and to do work to the house as part of us “downsizing” for retirement. We’d like to be able to continue living in our current home whilst we carry out work to my late parents house before selling our home to release funds to buy out my sisters share which she’s happy to accommodate.
I’m presuming for the purposes of probate the house would be valued at the time of my parents passing prior to us doing any work to it, is there any requirement given the house would be left to my sister and I in equal shares to buy her out within any particular time frame?
Any pitfalls I should be aware of?
Any legal “stuff” that would need to be sorted i.e land registry changes to ownership?
My sister has no wish to live in the house and is happy for us to move in and to do work to the house as part of us “downsizing” for retirement. We’d like to be able to continue living in our current home whilst we carry out work to my late parents house before selling our home to release funds to buy out my sisters share which she’s happy to accommodate.
I’m presuming for the purposes of probate the house would be valued at the time of my parents passing prior to us doing any work to it, is there any requirement given the house would be left to my sister and I in equal shares to buy her out within any particular time frame?
Any pitfalls I should be aware of?
Any legal “stuff” that would need to be sorted i.e land registry changes to ownership?
T5GRF said:
I’m looking for peoples experience and tips for buying out a sibling (my sister) from a jointly inherited property.
My sister has no wish to live in the house and is happy for us to move in and to do work to the house as part of us “downsizing” for retirement. We’d like to be able to continue living in our current home whilst we carry out work to my late parents house before selling our home to release funds to buy out my sisters share which she’s happy to accommodate.
I’m presuming for the purposes of probate the house would be valued at the time of my parents passing prior to us doing any work to it, is there any requirement given the house would be left to my sister and I in equal shares to buy her out within any particular time frame?
Any pitfalls I should be aware of?
Any legal “stuff” that would need to be sorted i.e land registry changes to ownership?
Afaik ( and I’m no Solicitor so would definitely check with one ) probate is indeed calculated on the estate at the time of passing ie now and then HMRC will want its share of any IHT payable within I believe 6 months ?My sister has no wish to live in the house and is happy for us to move in and to do work to the house as part of us “downsizing” for retirement. We’d like to be able to continue living in our current home whilst we carry out work to my late parents house before selling our home to release funds to buy out my sisters share which she’s happy to accommodate.
I’m presuming for the purposes of probate the house would be valued at the time of my parents passing prior to us doing any work to it, is there any requirement given the house would be left to my sister and I in equal shares to buy her out within any particular time frame?
Any pitfalls I should be aware of?
Any legal “stuff” that would need to be sorted i.e land registry changes to ownership?
I am assuming that it’s just you both that inherit and the will isn’t in any question.
What you and your sister then agree between you is I believe just between you.
I suppose an obvious pitfall comes if perhaps post your work the house value is then elevated to a bigger
figure beyond the actual work that you are paying for and your sister may object to this.
I’ve no idea how land registry would work though - technically you are both inheriting so the house would then be in your names and then when you buy her out as it were the title would presumably change once more to reflect your ownership.
But I doubt this would be anything more than a technicality especially these days when it’s all done electronically.
If it were me I would be keeping some paperwork drawn up between you both - just in case.
In essence it's all very straightforward. However, a couple of things,
You'll definitely need to get the IHT calculated/paid on the basis of a proper, paid-for RICS valuation of the house. The "normal" approach of an estate agent's guesstimate that's adjusted to actual selling price after sale of the property won't be available to you.
In the context of Capital Gains Tax you may need to be careful who owns the house while the improvements are made; main residence exemption etc.
You'll definitely need to get the IHT calculated/paid on the basis of a proper, paid-for RICS valuation of the house. The "normal" approach of an estate agent's guesstimate that's adjusted to actual selling price after sale of the property won't be available to you.
In the context of Capital Gains Tax you may need to be careful who owns the house while the improvements are made; main residence exemption etc.
alscar said:
T5GRF said:
I’m looking for peoples experience and tips for buying out a sibling (my sister) from a jointly inherited property.
My sister has no wish to live in the house and is happy for us to move in and to do work to the house as part of us “downsizing” for retirement. We’d like to be able to continue living in our current home whilst we carry out work to my late parents house before selling our home to release funds to buy out my sisters share which she’s happy to accommodate.
I’m presuming for the purposes of probate the house would be valued at the time of my parents passing prior to us doing any work to it, is there any requirement given the house would be left to my sister and I in equal shares to buy her out within any particular time frame?
Any pitfalls I should be aware of?
Any legal “stuff” that would need to be sorted i.e land registry changes to ownership?
Afaik ( and I’m no Solicitor so would definitely check with one ) probate is indeed calculated on the estate at the time of passing ie now and then HMRC will want its share of any IHT payable within I believe 6 months ?My sister has no wish to live in the house and is happy for us to move in and to do work to the house as part of us “downsizing” for retirement. We’d like to be able to continue living in our current home whilst we carry out work to my late parents house before selling our home to release funds to buy out my sisters share which she’s happy to accommodate.
I’m presuming for the purposes of probate the house would be valued at the time of my parents passing prior to us doing any work to it, is there any requirement given the house would be left to my sister and I in equal shares to buy her out within any particular time frame?
Any pitfalls I should be aware of?
Any legal “stuff” that would need to be sorted i.e land registry changes to ownership?
I am assuming that it’s just you both that inherit and the will isn’t in any question.
What you and your sister then agree between you is I believe just between you.
I suppose an obvious pitfall comes if perhaps post your work the house value is then elevated to a bigger
figure beyond the actual work that you are paying for and your sister may object to this.
I’ve no idea how land registry would work though - technically you are both inheriting so the house would then be in your names and then when you buy her out as it were the title would presumably change once more to reflect your ownership.
But I doubt this would be anything more than a technicality especially these days when it’s all done electronically.
If it were me I would be keeping some paperwork drawn up between you both - just in case.
As Panamas says above its very straight forward- or was in my case did exactly same bought sisters half, renovated parents house then in my case rented it out. However total value of estate was below £325k so no inheritance tax to pay Reasonably easy from a legal point of view to transfer the house ownership and to get probate granted( solicitor must have done cant remember much about it, only house and a few bank accounts to sort out) but it was 8years ago.
If you've got an idea of the total value of the estate someone will be along to advise on inheritance tax due- just the problem of funding the inheritance tax payment -unless enough cash in deceased estate.
If you've got an idea of the total value of the estate someone will be along to advise on inheritance tax due- just the problem of funding the inheritance tax payment -unless enough cash in deceased estate.
alscar said:
....
I’ve no idea how land registry would work though - technically you are both inheriting so the house would then be in your names and then when you buy her out as it were the title would presumably change once more to reflect your ownership.
...
Does the ownership not just change from 'estate of bloggs snr' to 'bloggs jnr' when things are settled up?I’ve no idea how land registry would work though - technically you are both inheriting so the house would then be in your names and then when you buy her out as it were the title would presumably change once more to reflect your ownership.
...
T5GRF said:
Thanks for the responses. There is unlikely to be any IHT liability to worry about. The will is straightforward leaving my sister and I a half share each. There won’t be any concern of capital gains tax.
You will have to report the value of the estate to obtain probate. You will then need to engage solicitor to transfer(sell) her half of house to you. Your solicitor will no doubt advise that she should have independent legal advise for sale(can be from same solicitor). Transfer can then be completed on land register to show it is 100% owned by you. Like you say if you sell your existing home and move into parents home it will become your maim resident so no CGT if you should subsequently sell it. If you decide to sell parents home without moving in it will be subject to CGT. From next tax year GBT allowance is only £6k per annum and £3k per annum for 24/25 tax year onwards. could result in a big CGT tax bill depending on house price increasesA couple of things not mentioned yet…
What if you start the renovation work then something happens in your sister’s life where she urgently needs her share of the money.
How quickly can you get her the money that she’s technically lending you while you complete the works and then sell your own property. I guess that could be anywhere between 3 and 12 months depending on your plans, and how easily/quickly you can sell your home when that time comes. Do you have any alternative means of raising that money to help her in her “situation”?
And the other consideration, if it is 12+ months before you pay her her share, will she anticipate/expect any interest on the loan she’s given you? I probably would.
What if you start the renovation work then something happens in your sister’s life where she urgently needs her share of the money.
How quickly can you get her the money that she’s technically lending you while you complete the works and then sell your own property. I guess that could be anywhere between 3 and 12 months depending on your plans, and how easily/quickly you can sell your home when that time comes. Do you have any alternative means of raising that money to help her in her “situation”?
And the other consideration, if it is 12+ months before you pay her her share, will she anticipate/expect any interest on the loan she’s given you? I probably would.
Claude455 said:
A couple of things not mentioned yet…
What if you start the renovation work then something happens in your sister’s life where she urgently needs her share of the money.
How quickly can you get her the money that she’s technically lending you while you complete the works and then sell your own property. I guess that could be anywhere between 3 and 12 months depending on your plans, and how easily/quickly you can sell your home when that time comes. Do you have any alternative means of raising that money to help her in her “situation”?
And the other consideration, if it is 12+ months before you pay her her share, will she anticipate/expect any interest on the loan she’s given you? I probably would.
All above covered by legal agreement(which is why she has to have own legal advice) with my sister which I had to sign before land registry transfer was done. What if you start the renovation work then something happens in your sister’s life where she urgently needs her share of the money.
How quickly can you get her the money that she’s technically lending you while you complete the works and then sell your own property. I guess that could be anywhere between 3 and 12 months depending on your plans, and how easily/quickly you can sell your home when that time comes. Do you have any alternative means of raising that money to help her in her “situation”?
And the other consideration, if it is 12+ months before you pay her her share, will she anticipate/expect any interest on the loan she’s given you? I probably would.
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