Do you pay stamp duty on an inherited property?
You do not pay Stamp Duty Land Tax (SDLT) when you inherit a property. Inheriting a home does not count as a purchase, so stamp duty is not charged at the point of inheritance. That said, stamp duty may apply later if you buy out someone else’s share, transfer ownership for money, or keep the inherited property and later buy another home. In these situations, stamp duty is calculated based on what you pay and whether you already own another property.
This article explains whether stamp duty applies when you inherit a property, and what happens if you later transfer ownership, buy out others, or purchase another home. It also covers how stamp duty interacts with mortgages and additional property rules.
Key points include:
- No stamp duty is due at the time of inheritance.
- Buying out another heir’s share will trigger stamp duty on the amount paid.
- Taking on a mortgage may sometimes count as consideration for stamp duty.
- Keeping the home and buying another may trigger the higher rate.
- Other taxes, such as inheritance tax or capital gains tax, are separate.
Inheriting a property and stamp duty
When you inherit a property, you do not owe stamp duty. This is true whether the property is passed on through a will or due to intestacy, and whether you inherit all or just part of the property.
Even if the property has an outstanding mortgage, stamp duty is generally not payable at the point of inheritance, because there is no purchase involved.
When stamp duty might apply
Although inheritance itself is not taxed through stamp duty, there are some situations where it becomes relevant later on.
Buying out other heirs and stamp duty
If you inherit a home jointly with others (such as siblings or co-beneficiaries) and you decide to buy their share, stamp duty is payable on the amount you pay.
This is treated as a normal property transaction, and tax is only charged on the portion you buy, not the full value of the home. For example, if you inherit 50% and pay £150,000 for the other 50%, stamp duty applies to the £150,000.
From April 2025, the stamp duty threshold will fall to £125,000, which means even smaller buyouts could attract a charge. If you already own another property and are not replacing your main home, you may also need to pay the additional 3% surcharge.
How stamp duty is calculated when you buy part of an inherited property
If you are buying only a portion of an inherited property, stamp duty is calculated based on what you pay for that share. The standard SDLT rates apply, and the 3% higher rate may also apply if you own other property.
Example:
You buy a 50% share from another heir for £200,000. You pay stamp duty on the £200,000 only, not on the full property value.
Stamp duty rates from April 2025:
Transferring your share to someone else
If you decide to transfer your share of the property to someone else and they pay you for it, this also counts as a taxable transaction, and they may have to pay stamp duty based on the value paid.
What about the mortgage?
If the property you inherit has an outstanding mortgage, stamp duty is usually not triggered unless you are taking on a share of the property in return for paying part of the debt. This is known as “consideration.”
In most standard inheritances, even with a mortgage, you will not pay stamp duty, but you should double-check how the mortgage is handled.
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Buying another property while keeping the inherited one
If you keep the inherited home and then go on to buy another, you may need to pay higher stamp duty rates on the new purchase. These apply to people buying additional properties, even if the first one was inherited.
If you plan to live in the inherited property and sell your previous main home, you might avoid the surcharge, but it depends on timing and eligibility. Always check with your solicitor before completing a purchase.
Selling or renting an inherited property
You do not pay stamp duty when selling an inherited home. However, you may need to consider:
- Capital gains tax (CGT) if the property has increased in value and is not your main residence.
- Income tax if you rent it out and earn above your personal allowance.
Stamp duty is only relevant when you buy, not when you sell.
Summary of stamp duty on inherited property
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You do not pay stamp duty when you inherit a property. But if you plan to buy someone else’s share, transfer ownership for money, or go on to buy another home, you might be affected by stamp duty rules. The amount you pay depends on the value of the share and whether you already own another property.
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