When siblings jointly inherit a property they usually take it as tenants in common in equal shares, and no one personally pays Inheritance Tax on receipt: the estate settles any IHT first. The tax that bites next depends on your route, sell, buy out, or keep and let, not on the inheritance itself.
This guide walks through all three routes for the 2026/27 tax year, sets out exactly who pays what, and works a full example on a £400,000 house left to three siblings. Every figure below is drawn from current gov.uk guidance and cited at the end.
How siblings usually own an inherited property
When two or more siblings inherit a house together, they normally hold it as tenants in common. That means each owns a distinct share (three siblings in equal thirds, for example), and each share can be sold, gifted or left by will independently. This is different from joint tenants, where owners hold the whole property together and a deceased owner's interest passes automatically to the survivors.
Two practical rules follow from tenants-in-common ownership:
- Probate first. The property cannot be sold or transferred until probate (or letters of administration) has been granted.
- Everyone must agree to sell. A sale needs all co-owners to consent. Where siblings cannot agree, one can apply to court for an order for sale under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). More on that below.
Do I pay tax when I inherit a house with my sibling?
No, not on receipt. Inheritance Tax is a tax on the deceased person's estate, and it is calculated and paid by the executors before assets reach the beneficiaries. As a sibling inheriting a share of a house, you do not personally hand over IHT just for inheriting.
The estate's IHT position uses these 2026/27 bands, all frozen until 5 April 2031:
- Nil-rate band: £325,000, the amount that passes free of IHT.
- Residence nil-rate band: £175,000, but only where a home passes to direct descendants (children or grandchildren). Siblings inheriting from a sibling do not get the RNRB.
- Taper threshold: £2,000,000. The RNRB reduces by £1 for every £2 the estate is worth above £2m.
- IHT rate: 40% on the chargeable value above the available bands.
So if any IHT is due, the estate settles it. What you inherit is a share of the property at its probate value, and that value becomes important for the next tax, Capital Gains Tax.
The three routes, and their tax at a glance
Siblings almost always choose one of three paths. Here is how the main tax and practical trade-offs compare.
| Route | Main tax that can arise | Key practical trade-offs |
|---|---|---|
| Sell and split | CGT for each sibling on their share of any gain from probate value to sale price (18% / 24%), each with a £3,000 allowance. Report and pay within 60 days. | Cleanest exit, everyone walks away with cash. Needs all owners to agree. No SDLT. |
| One buys the others out | SDLT for the buying sibling on cash paid plus any mortgage share taken on. Selling siblings may have CGT on their share of the gain. | Keeps the home in the family. Buyer needs the cash or a mortgage. 5% surcharge if the buyer already owns a home. |
| Keep and let | Income Tax on rental profit (split by ownership share). CGT later on eventual sale. No SDLT on simply keeping it. | Shared income and shared responsibility. Everyone stays tied in. Landlord duties and joint decisions. |
A decision framework for siblings
Before running numbers, agree the direction. These questions usually settle it:
- Does anyone want to live in it or keep it? If no, sell and split is simplest. If one sibling does, a buyout or keep-and-let is on the table.
- Can the sibling who wants it afford to buy out the others? If yes, a buyout works. If not, keep-and-let or sale may be the only options.
- Is everyone aligned? Selling needs unanimous consent. If one refuses, TOLATA is the fallback, but it is slow and costly, so negotiate first.
Do we pay CGT if we sell the inherited house?
Possibly, but only on the growth in value after death. When you inherit, your Capital Gains Tax base cost is the probate (date-of-death) value, not the price your relative originally paid. CGT then applies only if the property is worth more when you sell than it was at probate, less allowable costs such as legal fees, estate-agent fees and capital improvements.
The 2026/27 residential rules:
- Rates: 18% on gains falling within your basic-rate band, and 24% for higher and additional-rate taxpayers.
- Annual exempt amount: £3,000 per person. Each co-owning sibling has their own £3,000 to set against their share of the gain.
- Private Residence Relief: only available to a sibling who actually lived in the property as their main home.
- 60-day rule: UK residents must report and pay CGT within 60 days of completion when selling UK residential property.
If the house is sold soon after death at close to probate value, the gain, and the CGT, may be small or nil. For a deeper dive on property gains, see our guide to how much Capital Gains Tax you pay on property, and the 60-day CGT reporting rules.
How does buying out a sibling trigger stamp duty?
A transfer under the will or intestacy with no consideration (nobody pays anything for their share) is exempt from Stamp Duty Land Tax. SDLT only bites when one sibling actually buys out another.
When that happens, the chargeable consideration for the buying sibling is:
- the cash paid for the other share or shares, PLUS
- that share of any mortgage debt taken on as part of the deal.
Standard residential SDLT bands from 1 April 2025 (England and Northern Ireland):
| Band | Rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1,500,000 | 10% |
| Above £1,500,000 | 12% |
Crucially, a 5% higher-rate surcharge is added on top of every band if, after the buyout, the buying sibling owns more than one residential property (where the consideration is £40,000 or more). A sibling who already owns their own home and buys the inherited house as a second property will pay it. For related buy-to-let context, see stamp duty on buy-to-let.
Worked example: three siblings and a £400,000 house
Anna, Ben and Chris inherit their late mother's house, valued at £400,000 at probate, in equal one-third shares. Each share is worth £133,333. The estate has already dealt with any Inheritance Tax, so none of them pays IHT on receipt.
Step 1: Anna buys out Ben and Chris
Anna wants to keep the home and buys the other two shares. The consideration is two-thirds of £400,000, so £266,667 (assume no mortgage is taken on, so the whole payment is cash).
SDLT on £266,667 using the standard bands:
- 0% on the first £125,000 = £0
- 2% on £125,001 to £250,000 (£125,000) = £2,500
- 5% on £250,001 to £266,667 (£16,667) = £833
- Standard SDLT = £3,333
Now the surcharge. If this becomes Anna's only home (she owns nothing else), no surcharge applies and she pays £3,333. But if Anna already owns her own house, so after the buyout she owns two properties, the 5% surcharge is added on the full £266,667: 5% × £266,667 = £13,333, giving a total of £16,666.
Note on Ben and Chris: they are disposing of their shares. If the buyout happens soon after death at the £133,333 probate value, their base cost equals what they receive, so there is little or no gain and little or no CGT. The tax bites later, on growth in value.
Step 2: the alternative, all three sell later at a gain
Suppose instead the siblings keep the house jointly and sell it later for £460,000. The gain is £460,000 less the £400,000 probate value, so £60,000, split three ways = £20,000 each (ignoring costs for simplicity).
Each sibling sets their own £3,000 annual exempt amount against their share:
- Taxable gain each: £20,000 − £3,000 = £17,000
- A basic-rate sibling at 18%: £17,000 × 18% = £3,060
- A higher-rate sibling at 24%: £17,000 × 24% = £4,080
Because each sibling has their own £3,000 allowance and their own rate band, three owners shelter £9,000 of gain between them, more than a single owner could. Everyone must report and pay within 60 days of completion. You can sense-check figures with our Capital Gains Tax calculator.
What if one sibling wants to keep it and the others want to sell?
This is the most common flashpoint. The options, in order of preference:
- Buyout. The sibling who wants to keep it buys the others' shares at market value (see the SDLT above). This is the cleanest solution when the buyer can fund it.
- Keep and let. If no one wants to sell but no one can buy out either, the siblings retain the house jointly and let it. Rental profit is split by ownership share and each reports their portion. See the tax on inherited rental property for how the letting income is taxed.
- TOLATA order for sale. Where siblings genuinely cannot agree, any co-owner can apply to court under TOLATA for an order for sale. It works, but it is slow, costly and adversarial, so it is a last resort.
Keep and let: what to know before you become joint landlords
Retaining the property turns the siblings into joint landlords. Rental profit is taxable Income Tax and is split according to each sibling's ownership share, and each sibling reports their share through Self Assessment. If you later gift or reshuffle shares, be careful: transfers between siblings are not spouse-exempt. Only spouses and civil partners get the no-gain, no-loss treatment covered in our post on gifts between spouses and CGT/IHT, so a share transfer between siblings can itself be a CGT disposal.
Practical checklist for co-inheriting siblings
- Confirm the ownership type: tenants in common (distinct shares) is the norm.
- Wait for probate before selling or transferring.
- Get a proper probate valuation, it is your CGT base cost.
- Agree the route early; document who is buying, selling or keeping.
- Budget for SDLT on any buyout, including the 5% surcharge if the buyer owns another home.
- Diarise the 60-day CGT report on any sale.
- Take advice before a share transfer between siblings, it is not spouse-exempt.
Splitting an inherited property well is as much about agreement as arithmetic. If you want the tax modelled properly before you commit, book a free call with Zmartly and we will run your specific numbers.
Frequently asked questions
Do I pay tax when I inherit a house with my sibling?
No, not on receipt. Inheritance Tax is paid by the deceased's estate before the property reaches you, so beneficiaries do not personally pay IHT just for inheriting. You take your share at its probate value, which becomes your Capital Gains Tax base cost for any future sale.
Do we pay CGT if we sell the inherited house?
Only if it has risen in value since death. Your base cost is the probate value, and CGT applies to the gain up to the sale price, less allowable costs. Each sibling has their own £3,000 annual exempt amount and pays 18% or 24% on their share, reported and paid within 60 days of completion.
How does buying out a sibling trigger stamp duty?
A transfer under the will with no payment is exempt, but a buyout is a purchase. The buying sibling pays SDLT on the cash paid plus any mortgage share taken on, using the bands from 1 April 2025, with a 5% surcharge added if they end up owning more than one residential property.
What happens if one sibling wants to keep it and the others want to sell?
Ideally the sibling who wants it buys out the others at market value, paying SDLT on the consideration. If that is not affordable, the siblings can keep and let the property jointly. Where no agreement is possible, any co-owner can apply to court for an order for sale under TOLATA as a last resort.
