Inheriting property with your siblings: what are the options?

If you anticipate inheriting the family home from your parents, it’s natural to focus on the potential benefits, such as financial security or the emotional value of preserving a family legacy. However, inheritance can become complex, particularly when multiple siblings are involved. Disagreements over property division, differing financial expectations, and emotional attachments can lead to conflicts that may complicate the process.

Additionally, there are tax implications, maintenance responsibilities, and legal considerations to navigate. To ensure a smooth transition and mitigate potential disputes, open communication with your siblings and professional guidance are essential. A proactive approach can help clarify intentions, establish shared goals, and ultimately preserve family harmony. Here are some key considerations:

Selling the Property

Selling the home may be the preferred option, especially if you and your siblings cannot agree on what to do with it. If the property is sold, the proceeds can be divided according to each person’s stake in the inheritance.

However, it’s important to consider tax implications. Any capital gains from the sale must be declared in your tax return. There are exemptions, such as when the property was acquired before 20 September 1985 and is sold within two years of inheritance. Seeking professional tax advice before making a decision can help clarify obligations and potential exemptions.

Renting the Property

Keeping the home as an investment property is another option. This requires a discussion about how rental income will be divided and who will take on responsibilities such as liaising with real estate agents, managing bills, attending strata meetings (if applicable), and handling maintenance and repairs.

Buying Out Your Siblings

If your siblings want to sell but you wish to keep the home, you may consider buying them out. Your ability to do so depends on your financial position. If you don’t have sufficient funds to buy their shares outright, you may need to secure financing from a bank or lender.

Engaging a solicitor or conveyancer is advisable to assist with the legal aspects of the transaction. A property valuation will be required to determine market value, which will also impact stamp duty calculations—though full or partial exemptions may apply in some cases.

Private Arrangements Between Siblings

If selling, renting, or a buyout isn’t ideal, you and your siblings may be able to reach a different arrangement. For example, if one sibling wishes to live in the property but cannot purchase it outright, a rental agreement may be an option. However, if rent is set below market value, there may be limits on how much can be negatively geared for tax purposes.

Handling Inheritance Disputes

In some cases, beneficiaries cannot agree on what to do with an inherited property, and court intervention becomes necessary. Disputes may also arise if spouses or children have different opinions on the property’s future. These conflicts can strain family relationships, making it crucial to anticipate potential issues and address them proactively.

Selling the property is often the least stressful solution, as co-ownership can become complicated, particularly when future generations inherit shares. However, the best course of action depends on your family’s unique circumstances. Consulting legal, financial, and advisory professionals can help ensure an informed decision that aligns with your family’s needs and goals.

For more information book a complimentary initial appointment with our Fiducian Financial Adviser.

Source: https://www.fiducian.com.au/

Lindale Insurances Pty Ltd ATF Lindale Insurances Trust ABN 27 027 421 832 is a Franchisee of Fiducian Financial Services Pty Ltd, Level 4, 1 York Street, Sydney NSW 2000. AFSL 231103 ABN 46 094 765 134.

The information (including taxation) provided on this website is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement.

Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of Fiducian. They cannot be reproduced in any form without the express written consent of the author.