Selling our parents family house to sibling

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ChocolateTeapot

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Edit: Apologies - this was my first post and I didn't say hi properly - for family reasons, I can't give my full name right now as this is all a bit messy, but I have been lurking on the site for a few weeks now, and the advice people give has been really good... so Hi everyone!

I have 2 siblings. Our parents passed away 5 years ago and a year ago. The house and my siblings are in the UK.

One sibling wishes to buy out the other two. We each own houses, but this sibling moved into our parents house to look after the family dog, who subsequently passed away. They intend to sell their home to buy us out.

The house has been valued for probate at 550k.
Its current market value is around 100k more, and it is in a sought after location where these properties rarely come up.
We completed probate late as the estate is complicated as my parents were mis-sold a trust, but it now seems we face a tax bill of between 127k and 210k between us.

How do people normally calculate a fair price for a sibling to buy out others?


thanks in advance for any advice
 
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DannyBoyD said:
Get three valuations and take an average
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No, get one valuation that the acting valuer will be happy to defend if there are later legal or Revenue issues.

Relying simultaneously on several varying valuations would mean that you have no-one to defend the composite figure you have derived from those valuations, if your treatment is challenged. The existence of these competing valuations might well undermine the evidential credibility of the figure you have used.
 
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T McGibney said:
No, get one valuation that the acting valuer will be happy to defend if there are later legal or Revenue issues.

Relying simultaneously on several varying valuations would mean that you have no-one to defend the composite figure you have derived from those valuations, if your treatment is challenged. The existence of these competing valuations might well undermine the evidential credibility of the figure you have used
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Who would challenge the treatment?
 
As the house and the siblings are in the UK, you will be subject to UK rules and practice which may well differ from Irish rules and practice, so be careful about the advice you get on Askaboutmoney.

ChocolateTeapot said:
The house has been valued for probate at 550k.
Its current market value is around 100k more, and it is in a sought after location where these properties rarely come up.
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Often in transactions between families, the value is agreed without the need to pay a valuer.

Has it risen in value by €100k since probate? Or was the probate value too low?

If two of you are very well off and he is less well off, you don't need to extract the last drop from the price.
 
ChocolateTeapot said:
Who would challenge the treatment?
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Revenue can challenge the overall treatment if they felt it was an effort to avoid CGT by the beneficiaries.

In this case, the potential tax pain for the OP is partially the impact of the lower probate value but I presume there are other tax implications elsewhere as well.
 
You could get three 'free' valuations from estate agents operating in the area and take the average. If any chance of a challenge either from family or tax officials, you could pay a professional valuer and the cost of same could come out of the estate. The Irish taxman would be interested in how much is coming to you and if any inheritance tax on same is due.
 
hazelgreen said:
You could get three 'free' valuations from estate agents operating in the area and take the average. If any chance of a challenge either from family or tax officials, you could pay a professional valuer and the cost of same could come out of the estate.
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What would be the point of that? The die would be well and truly cast by that stage.
 
Brendan Burgess said:
As the house and the siblings are in the UK, you will be subject to UK rules and practice which may well differ from Irish rules and practice, so be careful about the advice you get on Askaboutmoney.



Often in transactions between families, the value is agreed without the need to pay a valuer.

Has it risen in value by €100k since probate? Or was the probate value too low?

If two of you are very well off and he is less well off, you don't need to extract the last drop from the price.
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We had a RICS evaluation for probate which came out at 550k - sibling buying believes the house was worth less.

RICS valuation said that value for probate 10% less than market value at the time, which would have been 605K. Prices have risen since, and agents have contacted to ask if we are interested in selling quoting a higher value. The house is well maintained with no structural issues.

We do not want to extract the last drop from the price at all - more important to stay friends and be comfortable with eachother afterwards - but we want to use the most fair method for all concerned.

Each of us could buy out the others by selling our own homes with some money left to do up the place or invest elsewhere, but only one of us is interested in doing so.
 
DannyBoyD said:
Alternative - put it on the market and see what offers you get. Purchasing sibling can match best offer.
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I would do this.

Families always look for the lowest value for probate and hope to get a higher value at the actual sale. One sibling shouldn't benefit from this while the other two lose out £33,000. We're not talking chump change here.

But like Brendan said, I wouldn't try to extract every last penny from the deal. Come to a price you can all agree on and then forget about house prices.
 
ChocolateTeapot said:
We do not want to extract the last drop from the price at all - more important to stay friends and be comfortable with eachother afterwards - but we want to use the most fair method for all concerned
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It should be fairly simple. It's either agree a price between you or go on the market to the highest bidder.

The only way to determine the market value is, surprisingly, to put it on the market. But this comes with costs like the EA so if it made 650k, you would probably net about 635k

Get another proper valuation done. Knock 2-4% of this for costs/time/hassle and suggest this to your siblings.

If the sibling who wants to buy it still disagrees then suggest the only other option is to go on the market. They can either agree now to a figure of 620-635k or risk it being bid well up over 650

The purchasing sibling has the most to gain by agreeing a price and the most to lose going to market. If you could agree 630k, they pay 420k for the 2/3 share. If you go to market and it goes for 660k, they pay 440k plus costs.

So maybe 25k or more to let it go to the market. For you, you get 210k agreeing now or 220k less costs. You gain maybe 5k more on the market.

ChocolateTeapot said:
We had a RICS evaluation for probate which came out at 550k - sibling buying believes the house was worth less.
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If your sibling wants to be stubborn and expects to agree on a price below 550k then just go on the market. If they can't see that they have the most to gain by agreeing a reasonable price then that's their own problem
 
Thank you everyone.
We were wondering if it was normal for siblings to sell their share of house at probate value a couple of years after - but obviously not.
Further to all your advice, we will update the sale valuations and find out what we are really dealing with, then it looks like its most reasonable to discuss something closer to market value minus 4%.
If sibling cannot afford that, or doesn't want to use that much of disposable inheritance, then at least they will have a larger equal share that they can put to another place. We will have to pay tax on the difference between probate value and market rate, but there is a HUGE difference in the tax level.
Thank you - your advice was really enlightening.
 
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