I’m worried I’ll lose my bonuses in a help-to-buy Isa and/or relief from stamp duty land tax
Q My partner and I are looking to buy our first home in London together so have both been saving in help-to-buy Isa accounts. However, I am soon inheriting a share of a property in Finland. I understand that this apparently ruins my chances of benefiting from any first-time buyer advantages here in UK as I am not allowed to own or have owned any other property beforehand, even overseas.
After a lot of research, I still haven’t quite managed to find a confirming answer if it makes any difference what the value or owned percentage of the property to be inherited is. In some cases I have understood that the higher stamp duty charges can be negotiated, but I haven’t quite found any guarantees about this either. In my case I will be inheriting 50% of a property where my share is worth less than £25,000 – I suppose no matter how low in value or how small percentage I’d own, it wouldn’t make a difference? I am mainly asking, as of course for the papers we can put down just 49% as my share, should this make a difference as it has a massive difference in the cost of buying my first home here in UK.
To my sister, who inherits the other half, it makes a difference to put down just 49% under her name due to the laws in Finland for first-time buyers, so if it has no benefit to me what the percentage is, I will take the hit and put 51% under my name. I will be also selling the property immediately but I have understood this does not change the situation still as I have, even if just for a short period, owned a part of a property before buying my first home in UK. Is there perhaps some kind of time limit in which I’d need to make a purchase of my own first home here in UK once I’ve inherited the property or does this simply not matter either?
A In the words of the government guidance on the subject, to count as a first-time buyer – and so qualify for the bonuses in a help-to-buy Isa and/or relief from stamp duty land tax (SDLT) on first-time properties costing up to £500,000 – “a purchaser must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world. This includes previous acquisition by inheritance or gift.” A major interest broadly means owning either the whole or a share of a freehold property or a leasehold property with 21 years or more left on the lease. Major interest doesn’t mean the proportion you own so saying that you own only a 49% share doesn’t mean that you don’t own a major interest. It would also be untrue as both you and your sister inherited a 50% share of the property in Finland.
The value of your share makes no difference to the fact that the inherited property stops you from being a first-time buyer. And, even, though your partner is a first-time buyer, neither of you will qualify for SDLT relief because where property is bought jointly, all joint owners have to be first-time buyers. And no, it doesn’t matter how long after you’ve inherited that you buy your first home and there is no time limit.
The good news is that because your share in the inherited property is worth less than £40,000, you won’t have to pay the higher rate of SDLT on second properties (if you don’t manage to sell the Finnish property before buying your home in the UK). Also your non-first-time buyer status won’t stop your partner qualifying for the government bonuses with his/her help-to-buy Isa.