Selling my home whilst on IS

Mr_Mcgregors_wife

I am currently on IS after my marriage breakup and in the process of getting divorced. My ex will soon be signing the house over to me. I am also recieving some payments from DWP which pays towards my interest on the mortgage.

It is my intention to sell the house.I plan to live in rented accommodation and get a job and once the required time has passed, buy my own home using the money I make from the sale of the house as a deposit.

My question is: Once I sell the house, will I immediately lose all of my benefits and have to live off the profits until such time that I find a job (which could take months). Ideally I would not use that money as i will need all of it for a deposit especially as I will now be buying a home on my own.

Any help would be appreciated.

princessdon

Yes you will for some benefits if over 16K profit.

You may keep some benefits (CTax etc) but may loose some

What benefits are you on and what is the estimated capital.

FBaby

Ideally many tax payers would like to pay less taxes each month so they could put more money aside each month to put a deposit down for a house quicker...

I don't mean to be rude, but remember that benefits is not free money, it is tax money coming from people who also have to make sacrifices.

So yes, you will be expected to live off your savings (over 16K, over 6K reducing the amount you receive).

BigAunty

It applies to means tested benefits (for example, IS, council tax, housing benefit) but doesn't apply to universal benefits (child benefit, for example) or to non-means tested benefits (for example) Disability Living Allowance. For tax credits, it is the interest earned over £300 that is a factor.

So you would need to specify your benefits for the posters here to help you because some are capital/income based and others aren't. Or you can model this scenario of the post-house sale capital by entering the information into the Turn2us online benefit calculator.

missapril75

The value of a property not one's home can be disregarded while it's up for sale.

The money received from one property sale can also be disregarded if it's earmarked for the purchase of another home so, no, it needn't disallow your claim continuing.

[Deleted User]

FBaby wrote: »

Ideally many tax payers would like to pay less taxes each month so they could put more money aside each month to put a deposit down for a house quicker...

I don't mean to be rude, but remember that benefits is not free money, it is tax money coming from people who also have to make sacrifices.

So yes, you will be expected to live off your savings (over 16K, over 6K reducing the amount you receive).

for someone "not being rude"you come very close

OP there may be a possibilty that the capital can be ignored for a period,6 months unless its changed
you need to speak to someone at income support

princessdon

That is down to interpretation

I certainly read it as - sell then move - therefore capital as opposed to a home.

missapril75

princessdon wrote: »

That is down to interpretation

I certainly read it as - sell then move - therefore capital as opposed to a home.

This part?

Earmarked capital
If capital from the sale of a house is earmarked for home purchase, it is ignored for up to 26 weeks or longer in certain circumstances.

Mr_Mcgregors_wife

Sorry for the confusion. i should have been clearer. I need to sell my home in order to have the deposit to buy another. But as I am not currently working, I will have to rent as soon as my house is sold as I cannot get a mortgage without a job. Obviously, i don't expect benefits whilst I have a large sum of money ( am hoping to get 20k) but I was wondering whether the cut off of benefits would be effective immediately. I had also read that any profit would be disregarded if it was all going on another property. However, the time between me selling and actually getting employment may be months and would also mean that I would not be immediately be buying a house. So therefore, though I do intend for that money to be used, it will take time before i am in a position to buy. I am concerned that I would be spending all my deposit on living expenses and it would dwindle down to a point where even with a job I would be unable to buy a house. I do not intend to be on benefits forever. Also, I have 2 young children under the age of 5 and currently am living in a house which is too expensive. The LPA told me that due to my current mortgage being so high and the fact that my children are under school age it would be foolish of me to get a job as I would risk my home being repossessed if I fell behind with the payments and I would be better off waiting until they are at school.
This is the reason why I need to sell. I do not want to be a stay at home mum for the next 4 years so this seems like my only option. Sell the house, get rid of a huge mortgage,rent somewhere, get a job, buy a house which I can afford!

To a previous poster, I get IS, CTC, CB, CT and some interest paid on my mortgage.

princessdon

missapril75 wrote: »

This part?

it depends on the rules (I have no idea) but earmarked is open to interpretation.

Logically any mortgage will require a minimum (and that is generous following a period of benefit claims) 3 months or end of probation.

Plus can they realistically buy - if they have 2 small children it is hard (I know I have small children) to get a decent wage after childcare. For Eg OP earns £20K - after childcare commitments it isn't a huge mortgage IF she finds work (and this is really hard for parents).

So can she realistically say "the capital is earmarked for a new home" without any come back and 100% acceptance? At what point do they say - When is the purchase?

Are you saying I could sell my home (keep the £200K capital) and claim HB for 6 mos plus "in case I buy in the future"?

Not a criticism of you OP - I have huge admiration for anyone who following a break up and going alone WANTS to work - just trying to get the fuller picture for my own mind if nothing else.

mikey_bach

For I.S purposes if the customer sells a property and has capital, it can be disregarded for up to 26 weeks if they intend to buy another property with the proceeds of the sale.
eg
cust sells house 160k mortgage 30k, 130k capital,
disregarded 26 weeks if intends to buy.
stays on I.S if buys property for eg 125k within 26 weeks
or claim closes if doesnt.
it would go to a DM of course