Inheriting property with siblings: what are your options?

If you anticipate inheriting the family home from your parents, it is understandable to concentrate on the potential advantages, such as financial security or the emotional value of preserving a family legacy. However, the dynamics of inheritance can become quite complex, especially when multiple siblings are involved. Disagreements over property division, differing financial expectations, and emotional attachments can lead to conflicts that may complicate the inheritance process.

Additionally, there may be tax implications, maintenance responsibilities, and potential legal considerations to navigate. To ensure a smooth transition and to mitigate potential disputes, it is advisable to engage in open communication with your siblings and consider seeking professional guidance. This proactive approach can help clarify intentions, establish shared goals, and ultimately preserve family harmony. Here are a few considerations:

Selling the property

Selling the property might be your first choice, or it might be a potential solution if you and your siblings can’t agree on what to do with the property and would rather wash your hands of it.

If you were left with an equal share, then the proceeds of the sale can be divided equally. If not, then the amount each person will be entitled to might correspond to their stake in the property.

Keep in mind that your share of any capital gains from selling the property will have to be declared in your tax return. There are, however, some cases where you might be exempt from paying capital gains tax, such as if your parents acquired the property before 20 September 1985 and you and your siblings dispose of it within two years of inheriting it. Before making any decisions, consider seeking professional tax advice so you’re clear on your obligations.

Renting the property out

There’s the option of keeping the property as an investment. This will require a discussion about how rental income will be divided, as well as who will take on the responsibility when it comes to liaising with real estate agents, attending strata meetings (if required), managing bills, and paying for maintenance and repairs.

Buying out your siblings

If your siblings want to put the property on the market but you find you’re still attached to it, then you might want to consider buying them out. Of course, your ability to do so will depend on your financial position, and if you don’t have the cash to buy their share outright, you’ll need to secure financing from a bank or lender.

You should also think about engaging a solicitor or conveyancer to help you navigate the legal aspects of the sale. What’s more, a valuation of the property will also need to be obtained. The market value will then be used to calculate how much stamp duty is payable on the property purchase (although there are some cases where full or partial exemptions might apply).

Private arrangement between siblings

If the above options don’t suit you and your siblings, you might be able to reach another type of agreement. For example, if one sibling wants to live in the property but isn’t in a position to purchase it from the others, you might agree to a rental arrangement. Just keep in mind that if you charge below market rate, there might be limits on how much you can negatively gear.

Handling inheritance disputes

Sometimes, beneficiaries can’t decide what to do with an inherited property and it becomes necessary to involve the courts.

Problems can also arise when spouses or children have different ideas about what should be done with the property. Therefore, anyone inheriting a home should be vigilant for potential rifts, both within and between families.

Ultimately, selling the property may prove to be the least stressful option. Co-owning a property can present numerous complications, particularly as new generations of beneficiaries come into play. The decision, however, will ultimately depend on your family's unique circumstances and should be made in consultation with legal, financial, and advisory professionals.