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James Cook
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Probate & UK trusts, tax and estate planning
Q&A: My father has left his home to me and my siblings. What will it cost to buy out my siblings?
James Cook answers a reader’s question in The Sunday Times.
Stamp duty land tax (SDLT) will most likely be payable if you buy out your siblings’ shares of your father’s property. For example, if the home is worth £1m and your siblings’ shares total £750,000, the liability would be £27,500. SDLT is calculated on a sliding scale, with no charge on the first £125,000, 2% on the next £125,000, 5% on the next £675,000, 10% on the subsequent £575,000 and 12% on the portion over £1.5m. If you already own a residential property, an extra 3% SDLT would be added, so the total stamp duty in this example would be £50,000.
Capital gains tax (CGT) might also come into play, at a rate of 18% or 28% (depending on your income-tax band), although this would be levied on your siblings, not you. All the children would be deemed to have acquired the property at the date-of-death value, but your siblings would be liable for CGT if there had been any increase in value following your father’s death on their respective shares, less their annual CGT exemptions (£11,300 for 2017-18 and £11,700 for 2018-19). In a slow pre-Brexit property market, there might be little or no gain in value to be taxed.
First featured in The Sunday Times on 10 Feb 2019.
18 April 2019