Property Tax Guide

Stamp duty on inherited property

Stamp Duty Land Tax (SDLT) is one of the most misunderstood taxes when it comes to inherited property. Many families worry about whether they will have to pay stamp duty when they inherit a house, buy out a sibling, or purchase a probate property.

This guide explains when stamp duty applies and when it does not, so you can plan ahead with confidence during what we know is already a stressful time.

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The Key Question

When do you pay stamp duty on inherited property?

The short answer is that you do not pay stamp duty when you inherit, but there are related situations where it may apply.

No stamp duty payable

✓Inheriting a property through a will or intestacy
✓Property transferred from estate to beneficiary by executor
✓Transfer between spouses or civil partners
✓Selling an inherited property (seller does not pay SDLT)

Stamp duty may apply

!Buying out a sibling or co-beneficiary after probate
!Purchasing a probate property from an estate
!Your next property purchase if you now own two homes
!Additional rate surcharge on second properties

Common Scenarios

Stamp duty scenarios for inherited property

Buying out a sibling's share

If you and your siblings inherit a property jointly and you want to buy their shares, SDLT rules depend on timing. If the buyout happens as part of the estate administration (before the property is formally transferred to you all), it may be structured to avoid SDLT. If the property has already been transferred into joint names and you then purchase their shares, SDLT is likely payable on the consideration you pay. The key distinction is whether the transaction is part of the administration of the estate or a separate purchase afterwards. Professional legal advice is essential to structure this correctly.

The additional rate surcharge

Since April 2016, buyers who already own a residential property pay an additional SDLT surcharge when purchasing another one. If you inherit a property and then buy a new home without selling the inherited one first, you may face this surcharge. Even inheriting a small share counts as owning a residential property. The surcharge is currently 5% on top of the standard rates and applies to the entire purchase price. You may be able to reclaim the surcharge if you sell the inherited property within 36 months of buying your new home.

Buying a probate property

If you are buying a property from an estate (not inheriting it, but purchasing it), standard SDLT rules apply. You pay stamp duty based on the purchase price, using the same rates and thresholds as any other residential purchase. The probate status of the property does not change the buyer's SDLT position. First-time buyer relief may apply if you qualify. The additional rate surcharge applies if you already own another residential property.

Selling an inherited property

As the seller, you do not pay stamp duty when selling an inherited property. SDLT is a buyer's tax. However, you may face other taxes when selling, particularly Capital Gains Tax on any gain above the probate value. Selling the inherited property may also help you avoid the additional rate surcharge on a future purchase, so the timing of selling can have SDLT implications for your next property transaction.

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Frequently Asked Questions

Stamp duty and inherited property - your questions answered

Stamp duty rules can be confusing, especially when inheritance is involved. Here are clear answers to the questions we hear most often.

No, you do not pay Stamp Duty Land Tax (SDLT) when you inherit a property. Inheritance is not a purchase, so there is no transaction that triggers SDLT. The property passes to you through the will or intestacy rules, and no stamp duty is payable at that point. However, stamp duty may become relevant later if you buy out a co-beneficiary's share of the property, or if inheriting the property means you own more than one residential property when you next buy (which could trigger the additional rate surcharge on your next purchase).

Yes. If you are buying a property that is being sold as part of a probate estate, you pay stamp duty in the same way as any other property purchase. The fact that the seller is an executor or personal representative does not change the SDLT rules for the buyer. You pay stamp duty based on the purchase price and the normal SDLT thresholds. If you already own another residential property, the additional rate surcharge may apply. There are no special SDLT exemptions for buying probate properties.

It depends on the circumstances. If the property is being transferred as part of the administration of the estate (for example, the executor transfers the property to you as a beneficiary), no SDLT is due. However, if probate has been completed and the property is already in joint names, and you then buy your sibling's share, SDLT may be payable on the amount you pay for their share. The rules can be complex, particularly where there is a mortgage involved. A solicitor experienced in inheritance property transactions can advise on your specific situation.

Yes, it can. If you inherit a property and it gives you an interest in more than one residential property, you may have to pay the additional 5% SDLT surcharge when you next buy a residential property. This applies even if you inherited only a share of the property. The surcharge applies to the entire purchase price, not just the amount above the threshold. However, if you sell the inherited property before buying your next home, and you own only one property at the point of purchase, the surcharge should not apply. The timing of sales and purchases matters.

No. Transfers of property between married couples and civil partners are generally exempt from SDLT, whether the transfer happens during the administration of the estate or afterwards. This applies even if the transfer is for consideration (payment). However, if the couple has separated or divorced, different rules may apply depending on the circumstances. If you are transferring an inherited property to your spouse or civil partner, your solicitor can confirm the SDLT position.

Stamp duty thresholds and rates change periodically. As a general guide, there is a nil rate band below which no SDLT is payable on residential property purchases. Above this threshold, SDLT is charged at increasing rates on different portions of the purchase price. First-time buyers may benefit from a higher nil rate band. An additional 5% surcharge applies to purchases of additional residential properties (above a minimum threshold). Because rates and thresholds change, always check the current HMRC rates or speak to your solicitor before committing to a purchase.

This page provides general information about Stamp Duty Land Tax and inherited property. SDLT rates and thresholds change regularly. Always seek professional legal and tax advice before making property decisions. Different rules apply in Scotland (LBTT) and Wales (LTT).

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