First time buyer stamp duty relief - proceeds from sale of inherited property abroad

Rich2808

My niece has received an inheritance from the Republic of Ireland which includes a 33% share of a house - its worth about 115,000 euro - and a small amount of savings from another uncle.

The house will be sold and the proceeds distributed amongst the three beneficiaries by the executor along with the savings - so their names will never appear on the property deeds, they will never live in it or be recorded as owners with the Irish land registry.

My question is would she be eligible still for the first time buyer stamp duty relief and help to buy isa bonus. She has never been registered as the owner of a residential property but has of course received the proceeds from sale of one?

The solicitor working for the executor is clear their names won't be on any deeds or reported as owners to the LR - but they will be subject to Irish capital acquisitions tax (inheritance tax which will apply at 33% above the any 30k inheritance) and if applicable capital gains tax.

Dean000000

Isn’t stamp duty like a Uk thing, and therefore not applicable anyway?

davidmcn

Dean000000 wrote: »

Isn’t stamp duty like a Uk thing, and therefore not applicable anyway?

The point is that the definition of "first time buyer" means "never owned a house anywhere on planet Earth", so owning a house in Ireland would be a problem. But merely receiving cash from the estate isn't an issue.

Rich2808

You also pay stamp duty in Ireland - but that isn’t the issue here.

The issue is whether it affects her ‘First time buyer’ stamp duty relief and help to buy or lifetime isa bonus entitlement if she decides to buy a UK property to live in at a later date.

00ec25

Rich2808 wrote: »

The issue is whether it affects her ‘First time buyer’ stamp duty relief and help to buy or lifetime is a bonus entitlement if she decides to buy a UK property to live in at a later date.

how much reassurance you get from this comment on an internet forum is down to you. The rules are set out in the Govt guidance which you can read yourself. The people answering on here are not legally qualified and are merely going by what it says in that guidance.

it might make her case stronger if the deceased's will instructed that the property be sold and the proceeds be distributed rather than as appears to be the case, she has inherited the property, but none of the beneficiaries want it, so the estate is selling it, which at face value, appears to be a perfect fit for Q12...

how any of the above will be judged in the real word depends on whether you consider yourself sufficiently legally qualified to be able to apply the annoying dumbed down FAQ given in the guidance

Q12. Can I claim relief if I have inherited a dwelling and am using the sale proceeds to
purchase a home?
A12. No, if the inheritance resulted in you acquiring a freehold or leasehold interest then
you cannot claim first time buyers’ relief.
Q13. Can I get relief if I have previously owned an inherited property?
A13. No, if the inherited property was a freehold or leasehold interest in a dwelling.

tlc678910

Hi,
I'd say she never owned or inherited a house. She is being given money from the sale of the house but as you point out for no single moment in time was she the owner of the house. The house is going from being owned by a relative directly to being sold. "Have you ever owned a property or a share of one anywhere in the world etc" seems to be a no to me. Even if she was left the house she has effectively rejected the house and took money instead.

...but as pointed out I'm not qualified, so what seems common sense to me might not be right. I fear even the experts might not agree so I might be tempted to just decide "no I have never owned a property' and crack on with it as it seems to be true as far as I can see.
Tlc

SDLT_Geek

00ec25 is right. What matters is whether your niece acquired an "interest in the property". Your niece will need to check Irish law and what happened on the probate and sale to establish the position. Using terminology from English law:

If before the sale the property or a share in it was assented to her, appropriated to her or if the administration of the estate was complete, then she acquired a share in the property and no longer counts as a first time buyer.

But if the personal representatives of the deceased sold the house in the course of the administration without such an assent or appropriation then your niece never had an interest in the property, that stayed vested in the personal representatives and she just received money as her inheritance, not a property interest.

HMRC agreed this week to amend their misleading guidance at SDLTM09795 which had suggested that if a property is left by a specific bequest in the Will the beneficiary obtains an interest immediately on the death of the testator. It says "as a result of the deceased bequeathing the interest as a specific gift". This is wrong in English law.

Slithery

00ec25 wrote: »

Q12. Can I claim relief if I have inherited a dwelling and am using the sale proceeds to
purchase a home?
A12. No, if the inheritance resulted in you acquiring a freehold or leasehold interest then
you cannot claim first time buyers’ relief.
Q13. Can I get relief if I have previously owned an inherited property?
A13. No, if the inherited property was a freehold or leasehold interest in a dwelling.

My understanding is that the OP has never owned a property. The property was under ownership of the deceased's estate and sold before the proceeds were released to the beneficiaries.

Again IANAL but the advice often given on these forums is to do the same thing for this exact reason.

00ec25

Slithery wrote: »

My understanding is that the OP has never owned a property. .

is your understanding based on being able to categorically answer geek's point about assent and Irish law?

Rich2808

00ec25 wrote: »

is your understanding based on being able to categorically answer geek's point about assent and Irish law?

Thanks for everyone's help - seems its as clear as mud. Perhaps the solicitor handling the estate can advise on the intricacies of Irish law and whether this affects eligibility for a first time buyer incentive in another country. Seems the actions of the executor also affect things - so will will need to consult him too.

The lack of clarity is unfortunate as well live in a diverse nation with people who may have ancestors from all over the world - yet reference is only explicitly made to UK law. Currently all UK and EU nationals and permanent residents qualify - and its possible that some may have inherited 20% of their grandma's flat in Bucharest or Lagos or Beijing or Delhi or Karachi but have never even seen the place let alone lived in it.

Worth noting the Irish also have a scheme to help first time buyers which you receive as a cheque direct from the Irish revenue which you personally apply for online.

https://www.revenue.ie/en/property/help-to-buy-incentive/index.aspx

The amount that you can claim is the lesser of:

€20,000
5% of the purchase price of a new home. For self-builds this is 5% of the completion value of the property or
the amount of Income Tax and Deposit Interest Retention Tax (DIRT) you have paid in the four years before your purchase or self-build.

To qualify, you must not have previously bought or built a house or apartment, either on your own or jointly with any other person. If you are buying or building the new property with other people, they must also be first-time buyers. If you have inherited or been gifted a property it will not affect your eligibility.

If only the UK could design such a simple scheme - no lifetime isas or help to buy isas or stamp duty reliefs that have complex and imprentrable regulations that even informed people on here take a different view on (let alone young first time buyers trying to follow it). You buy a house worth less than 500k euros, you take out a mortgage and get up to 20k euro back as a cheque from the Irish revenue immediately. And anyone who has inherited or been gifted a house qualifies.

So if any first time BUYERS don't qualify for our schemes (even though they have never bought a home which they ever lived in) - they can always move to Ireland! Because there first time BUYERS actually means that! Perhaps they should be renamed - as they aren't schemes for first time 'buyers'.

'A first time acquiring of a freehold or leasehold interest in a property anywhere on planet earth which could be used as a dwelling but dependent on the inheritance and probate laws of each country on planet earth incentive scheme'!

Rich2808

On a separate point is there clarity on the trigger date for ceasing to be an FTB in the case of inheritance. Would it be the date of death of the person leaving the house, date of probate, the date of sale by the executor or the date the property was transferred into the names of those inheriting (not applicable here) or the date the proceeds of sale were received from the executor? In Ireland that process from death to probate to sale can take many months if not years compared to the UK.

I have also noted the help to buy isa declaration form which adds the following rider:

"and
(i) which I acquired as a purchaser by way of sole or joint ownership; or
(ii) which entitles me to possess or occupy that land"

https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf'

So in addition to acquiring the interest you also have to be entitled to possess or occupy that land if you didn't by 'purchasing'. The executor will have that right - and the new owner but will my niece as legally she couldn't just move in anyway and possess or occupy it (the other two beneficiaries and executor might object as she only has a third share)!

Ultimately doesn't the legal declaration represent the contract with HMRC - not the unclear Q and A. If you signed it in good faith on that basis at least for the HTB isa bonus...?