Inheritance tax, gift tax. Help!

Hi all,

Long time user but first time poster. Can anyone help. i've been searching the site for info but can't seem to find what i need.

I'm currently trying to buy my old family home that has been willed to myself and my three brothers and sisters and I've agreed a price with them. I hired an acountant to advise me on the best way to do this.
He has told me that if the probate is applied for in all of our names then i will have to pay stamp duty (50% of current stamp duty rates for buying out the family) and probably gift tax as the revenue will more than likely have a different view on how much the house is worth and it will appear that my siblings are gifting me part of the value.

Then my accountant said that if i can get my siblings to "disclaim their inheritance", then the house would be left solely to me and i would no longer be liable for any tax. He said i could could then pay my sibling a "payment of consideration" for them disclaiming and they would also not be liable for tax.

I thought this sounded to easy so i asked the accountant and my solicitor to go and chack this out for sure, and they came back and said it's ok.

However, since presenting this to my family and advising them to go and get their own legal/taxation advice, another accountant has told them that the taxman will "come after me and them" so to speak.
They say that it's not supposed to be done that way.

I'm in the process of employing another accountant for a second opinion but would appreciate any info or advice that anyone could give.

Ta much in advance.

RH

From the info above the accountant is right. One or more parties can disclaim an inheritance and it will pass to the remainder man.
If you as the remainder pay the others to disclaim, they are viewed as taking an inheritance from the deceased individual and not you.
Provided the values are within the class threshold , there should be no tax.

But surely if the two transactions are at arm's length from each other where is the problem ? However the other members of the family would surely be liable to gift tax from the money been handed over for disclaiming ??

Russel Hobb

your accountant and solicitor are correct. If the family disclaim before taking the benefit then the house passes to you.

In return for the disclaim you are paying a consideration. This is deemed to come from the person who left the house in the first place to you all. As such, the amount of tax payable by your siblings would be no greater than that under the will.

I am a tax consultant so if you need to pm you can

Thanks for all the advice everyone. My solicitor showed me extracts from a law handbook yesterday backing up what himself and you guys have been saying.
So, hopefully when it's presented to the others it will be excepted.

Thanks again for your help.

RH

Careful here.

If a person disclaims an inheritance under a will it falls in to the residue of the estate.

You've got to be careful that the person taking the residue is the person you want the property to go to. That is why independent legal advice is recommended.

If there is no residuary clause in the will, then I would be of the view that a disclaimer could work in the circumstances outlined, however if there IS a residuary clause and it is not the person above then there could be problems.

Maybe post this on the legal section for another view. I might be wrong!!