Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • ajm410
    • By ajm410 22nd Nov 17, 5:32 PM
    • 136Posts
    • 32Thanks
    ajm410
    Am I a first-time buyer or not?
    • #1
    • 22nd Nov 17, 5:32 PM
    Am I a first-time buyer or not? 22nd Nov 17 at 5:32 PM
    Hi all,

    Could anyone please help me understand whether I am classed as a first-time buyer or not? I'm in the process of buying a flat, and while my mortgage broker suggested I wouldn't be initially, I've called HMRC today who've suggested that may not, in fact, be the case.


    In December 2015, my late mother passed away and I was named as the executor of her estate. I acquired a grant of probate to manage and sell her estate and distribute the monies to the trustees, which included myself and my sister. Earlier this year, I sold her primary residence as part of the estate (the seller on the contract was "MY NAME as Executor for the late MY MOTHER'S NAME"), and split the proceeds between the two of us.

    At no point, however, was the property/mortgage transferred into my name, nor did I ever reside in it.

    Bearing the above into consideration, would I be considered a first-time buyer for the purposes of paying stamp duty land tax?



    Many thanks in advance!!
Page 2
    • kingstreet
    • By kingstreet 30th Nov 17, 5:23 PM
    • 32,404 Posts
    • 17,397 Thanks
    kingstreet
    Thanks so much for all your answers.

    FYI... I contacted a solicitor, who said that, so long as, at the time of the estate being settled, I did not acquire or become the legal owner of the estate by way of a Transfer into my name for any part of the property, I am still a first time buyer.


    Wohoo!
    Originally posted by ajm410
    You're welcome!
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • Motivator
    • By Motivator 30th Nov 17, 6:17 PM
    • 18 Posts
    • 1 Thanks
    Motivator
    In order to count as a first time buyer, 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 acquisitions by inheritance or gift, or by a financial institution on
    behalf of a person under an alternative finance scheme.
    Relief is not denied by virtue of a previous acquisition as a trustee unless the purchaser was
    also a beneficiary of the trust.
    Relief is also not denied if the purchaser owns or has previously owned non-residential or
    mixed-use property, as long as that property did not include a dwelling.
    This restriction does not apply where the interest acquired was the grant or assignment of a
    lease with less than 21 years to run.
    If the property is purchased jointly, all the purchasers must meet these conditions.

    What do they class as major. I owned a quarter of my dads property.
    • bowlhead99
    • By bowlhead99 30th Nov 17, 8:55 PM
    • 7,000 Posts
    • 12,613 Thanks
    bowlhead99
    What do they class as major. I owned a quarter of my dads property.
    Originally posted by Motivator
    Relevant definitions from the new legislation:
    1
    Relief for first-time buyers
    (1) Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
    (2) After section 57A insert—
    “57B First-time buyers
    (1) Schedule 6ZA provides relief for first-time buyers.
    (2) Any relief under that Schedule must be claimed in a land transaction return or an amendment of such a return.”
    (3) After Schedule 6 insert—
    “SCHEDULE 6ZA
    RELIEF FOR FIRST-TIME BUYERS
    PART 1
    ELIGIBILITY FOR RELIEF

    etc etc etc
    Then fast-forward to:

    "Major interest”
    8
    The main subject-matter of a transaction is not a major interest for the purposes of this Schedule if it is a term of years absolute which has less than 21 years to run at the beginning of the day after the effective date of the transaction.
    As you'll notice from the bit of the guidance you quoted, "This restriction does not apply where the interest acquired was the grant or assignment of a lease with less than 21 years to run." This is basically saying the same thing.

    In other words, when they refer to a major interest in land, they don't mean some trivial interest like you have rights as a tenant for a year or so, or even some minor interest like a five year leasehold or ten year leasehold or 20 year leasehold after which the property goes back to the freeholder. By a 'major' interest in land they mean you have a freehold interest or you have a leasehold interest with 21+ years to run on it.

    So, if the property you owned with your Dad was a 50 year lease or an 80 year lease or a 125 year lease or a 999 year lease or it was freehold: those are all major interests in land.

    The regulation is not saying "ah, your Dad owned 80% of the property and you only owned 20% so you have a minor interest in the property you own, which doesn't count".

    You might only own a 10% share of a relevant interest in land, with your dad (or a friendly lion ) owning the remaining 90% of it (taking "the lion's share"). But if the TYPE of interest in land, is a major one (rather than a short term one which would revert back to someone else and would not count as you really owning the land/property), then that would stop you getting the stamp duty break when you buy a piece of another proper interest in land in the future.
    • Tom99
    • By Tom99 1st Dec 17, 12:22 AM
    • 696 Posts
    • 418 Thanks
    Tom99
    In this case I think a beneficiary will only not be a FTB if they owned a beneficial interest in the inherited property and there are two way that could happen.

    1st – The administrator of the estate formally transfers either the legal and/or the beneficial interest to the beneficiaries by way of a formal transfer or assent prior to the sale.

    2nd – The administration period of the estate has come to an end because “the residue of the estate as been ascertained before the sale of the property” by the estate. That way the estate is treated as holding the property as bare trustee with each beneficiary having a beneficial ownership for tax purposes. It is usually for CGT purposes that this option is looked into because if there is more that one beneficiary the gain is spread around. The definition is a bit vague but my understanding is that everything has to be for a know sum e.g. property sale and any outstanding debt like IHT.

    It is usually estate administrators wanting to claim the 2nd option for CGT purposes, I can't imagine HMRC every claiming option 2 had happened just the thwart a FTB claim.
    • Motivator
    • By Motivator 1st Dec 17, 10:11 AM
    • 18 Posts
    • 1 Thanks
    Motivator
    Relevant definitions from the new legislation:
    Then fast-forward to:
    As you'll notice from the bit of the guidance you quoted, "This restriction does not apply where the interest acquired was the grant or assignment of a lease with less than 21 years to run." This is basically saying the same thing.

    In other words, when they refer to a major interest in land, they don't mean some trivial interest like you have rights as a tenant for a year or so, or even some minor interest like a five year leasehold or ten year leasehold or 20 year leasehold after which the property goes back to the freeholder. By a 'major' interest in land they mean you have a freehold interest or you have a leasehold interest with 21+ years to run on it.



    So, if the property you owned with your Dad was a 50 year lease or an 80 year lease or a 125 year lease or a 999 year lease or it was freehold: those are all major interests in land.

    The regulation is not saying "ah, your Dad owned 80% of the property and you only owned 20% so you have a minor interest in the property you own, which doesn't count".

    You might only own a 10% share of a relevant interest in land, with your dad (or a friendly lion ) owning the remaining 90% of it (taking "the lion's share"). But if the TYPE of interest in land, is a major one (rather than a short term one which would revert back to someone else and would not count as you really owning the land/property), then that would stop you getting the stamp duty break when you buy a piece of another proper interest in land in the future.
    Originally posted by bowlhead99
    Thanks for the reply. The situation is or was. My dad owned a 50% share of a property . He passed away in 2015 my brother and myself inherited a twenty five percent share each. The property has now been purchased by the third party . What i am trying work out is 25% a major interest.
    • MobileSaver
    • By MobileSaver 1st Dec 17, 11:15 AM
    • 1,300 Posts
    • 1,782 Thanks
    MobileSaver
    Left my brother and me his estate which included a 50 percent share in a house ... I now find that we can not get the discount due to this . How can this be right
    Originally posted by Motivator
    You received an inheritance of probably tens of thousands of pounds and you are complaining life is unfair because you cannot get tax relief of a few thousand pounds?!?!? I really do despair at the sense of entitlement of some of the younger generation.

    What i am trying work out is 25% a major interest.
    Originally posted by Motivator
    As bowlhead99 stated, the legal definition of a "major interest" is nothing to do with the size of your share of the property; it is to do with whether the property was freehold or had a long lease.

    So in a nutshell, yes, 25% of a freehold property IS a "major interest" for SDLT purposes.
    Respect to 3 of the greatest actors of all time; amazing people who are totally believable as the characters they play & almost single-handedly make the shows they starred in:

    Peter Dinklage as Tyrion Lannister in Game of Thrones
    Daniel J. Travanti as Frank Furillo in Hill Street Blues
    Claire Danes as Carrie Mathison in Homeland
    • Motivator
    • By Motivator 1st Dec 17, 7:52 PM
    • 18 Posts
    • 1 Thanks
    Motivator
    Well thanks for your reply . I am only asking a question .
    If i inherited a large sum that is not the issue . Why would
    I not try to save some money .
    • Semilaurus
    • By Semilaurus 2nd Dec 17, 1:55 AM
    • 1 Posts
    • 0 Thanks
    Semilaurus
    Hello,

    I am not too sure if this is right place to ask a question but I have a similar problem. I had a question about the stamp duty for First Time Buyers.

    Me and my partner have recently found a property for which we gave an offer that was accepted. We already applied for FTB mortgage and have been given an offer. Now as the time came to fill legal paperwork, we came to a part where it asks whether any of us owned property anywhere in the word. My partner is not an issue at this, but my parents informed me that I might be a problematic area here. After they legally divorced, they split the assets the way they agreed. According to their divorce documents me and my brother should have received a flat each that we would become responsible of after we reach the age of 18. At the time that property was put "on my name" I was 14, according to the law I was still a minor that could not control the property. My mother decided to sell it when I was still 15. She sold it with my dad's permission. I have never had any control over it and did not receive any money from the sales as I was still under 18 and any property "in my name" was legally under their control and ownership. So theoretically I never actually had anything legally under my sole control and made no purchase or sale. Would this mean that buying my actual first property would eliminate me from the FTB's category?

    Any advice on this would be really helpful and would allow clearing out all those doubts.
    • SDLT Geek
    • By SDLT Geek 2nd Dec 17, 5:44 PM
    • 31 Posts
    • 12 Thanks
    SDLT Geek
    According to their divorce documents me and my brother should have received a flat each that we would become responsible of after we reach the age of 18. At the time that property was put "on my name" I was 14, according to the law I was still a minor that could not control the property. My mother decided to sell it when I was still 15. She sold it with my dad's permission. I have never had any control over it and did not receive any money from the sales as I was still under 18 and any property "in my name" was legally under their control and ownership. So theoretically I never actually had anything legally under my sole control and made no purchase or sale. Would this mean that buying my actual first property would eliminate me from the FTB's category?
    Originally posted by Semilaurus

    Whilst a person under the age of 18 cannot hold the legal title to property (it cannot be in their name) they can be entitled to the full beneficial ownership of the property. So it is not uncommon for parents to hold a property on bare trust for a minor. That would count as the minor having a "major interest" in the property and so not being a first time buyer if they later buy a home to live in.


    So your position will come down to the terms on which the flat was held. If it was held as "nominee" or as "bare trustee" for you it would count against you for the purposes of first time buyers relief. It is possible that some other arrangement was put in place, such as a discretionary trust where the trustees had a power to appoint the flat out to you, but did not do so. If that was the structure then you are still a first time buyer.


    The fact that you never received any money from the sale of the property suggests that it was not held for you on a bare trust as in that event you should have got the money.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,810Posts Today

7,916Users online

Martin's Twitter