My sister and I are about to inherit our late mother’s house – a 50:50 share each. The property is valued at around £220,000. If I was to buy my sister out of the property, would I have to pay stamp duty?
Stamp Duty Land Tax (SDLT) is charged, at varying rates, on the consideration given for a land transaction. The Chancellor has just announced an increase in the Stamp Duty threshold for 12 months from on or after 3/9/08 and as a general rule, no tax is payable on transactions in residential property if the consideration does not exceed £175,000 (previously £125,000). Tax is payable at: 1% between £125,001 and £250,000; 3% between £250,001 and £500,000; and 4% above £500,000.
So no, you will not pay SDLT as the market value of the share you are buying is under the 1% threshold of £125,000. If you were at one of the SDLT thresholds you should consider identifying any fixtures and fittings you might want to pay your sister separately for. These are then excluded from the SDLT calculation.
