Inheritance and Help to Buy ISA

Qwoin

I am aware that the H2B ISA is only for new buyers but does this also apply to someone who inherited a part share in a property?

My kids and my Ex were left equal shares in their grandmothers house and it was sold to pay them out. Does this mean that they are not eligible for a H2B ISA?

Thanks to anyone taking the time to reply.

Paenymion

From when I looked into this, it comes down to if the title was ever transferred into their names. If it was not (e.g. it was simply sold and they got a portion of the proceeds), then they still class as a "first time buyer".

Rich2808

Paenymion wrote: »

From when I looked into this, it comes down to if the title was ever transferred into their names. If it was not (e.g. it was simply sold and they got a portion of the proceeds), then they still class as a "first time buyer".

This is a very grey area and I have seen conflicting views on eligibility post an inheritance where (as usually applies) the house forming part of the estate is sold and the proceeds shared amongst the beneficiaries but never transferred into their names directly.

Some say if the will specifically says you get a share in their house/houses you are disqualified even if you only get a share of the proceeds when the house is sold by the estate - but if the will just says you get a share of the estate you do still qualify.

Others have suggested on here that in either case you are disqualified - as you obtained an interest in a house as you got the sale proceeds even if it was never transferred into your name via the deeds/land registry.

In the strictest sense your kids inherited a share in a property (i.e. an interest) and benefited from that monetarily when it was sold - so they are no longer a first time buyer in terms of the Government's eligibility criteria based on the latter view. But its a grey area.

Otherwise someone could inherit hundreds of thousands even millions via a house sale - and still get government assistance to buy a house? Doesn't quite strike me as being correct!

Sorry this doesn't help - as different people have different views.

The precise definition is below.
https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf/
"I do not own, and never have owned any interest in land, whether in the United Kingdom or elsewhere, which:
(A) is:
(i) in England or Wales:
(a) freehold;
(b) leasehold, where the lease was originally granted for a term certain exceeding 21 years; or
(c) commonhold; or
(ii) in Scotland, registered or recorded, or would be capable of being registered or recorded, as a right of absolute
ownership in the Land Register of Scotland or General Register of Sasines in Scotland, as applicable; or
(iii) in Northern Ireland:
(a) freehold; or
(b) leasehold, where the lease was originally granted for a term certain exceeding 21 years; or
(iv) an equivalent interest in land to the interests in land listed in paragraphs (A)(i) to
(iii) above under the laws of any jurisdiction outside the United Kingdom;
comprises a building that is used or suitable for use as a dwelling, or is in the process of being constructed or
adapted for such use; and
(C) (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."

Mojisola

https://www.theguardian.com/money/2019/apr/22/if-i-inherit-my-mums-house-will-i-be-able-to-use-my-lifetime-isa

"HMT says you can still be classed as a first-time buyer if you inherit a property but ownership of it is never formally transferred into your name – for example the property is sold after the death of its owner and the cash proceeds are passed to you rather than the title of the property."

Rich2808

Mojisola wrote: »

https://www.theguardian.com/money/2019/apr/22/if-i-inherit-my-mums-house-will-i-be-able-to-use-my-lifetime-isa

"HMT says you can still be classed as a first-time buyer if you inherit a property but ownership of it is never formally transferred into your name – for example the property is sold after the death of its owner and the cash proceeds are passed to you rather than the title of the property."

Note the word 'can'. It doesn't say 'will'!

And I wouldn't entirely trust an article in the money section of a newspaper - as its a grey area and might depend on how the will was worded.

I did sort of laugh at this comment in the article - which is self evident as the parent is still alive and thus still owns her home not the daughter!

"HMT also makes it clear that being the beneficiary of property in the will of someone who is still living (like your mother), doesn’t stop you from being a first-time buyer for lifetime Isa purposes. "

Eco_Miser

Rich2808 wrote: »

Otherwise someone could inherit hundreds of thousands even millions via a house sale - and still get government assistance to buy a house? Doesn't quite strike me as being correct!

As opposed to someone who inherits hundreds of thousands or even millions in company shares - and still gets government assistance to buy a house?

Unless there's a means test in the schemes the wealth of the purchaser, and where that wealth came from is irrelevant.

Rich2808

Eco_Miser wrote: »

As opposed to someone who inherits hundreds of thousands or even millions in company shares - and still gets government assistance to buy a house?

Unless there's a means test in the schemes the wealth of the purchaser, and where that wealth came from is irrelevant.

Note the point - but the issue is the funds came from the proceeds of selling a house in which you had 'acquired an interest' in via an inheritance.

If you had no interest in it you wouldn't of course have received the proceeds of selling it.

That is the point I am making - and the grey area which the FTB eligibility guidance is unclear on!

Despite that Guardian article the HMT guidance on the first time buyer stamp duty relief states this on page 15 re inheritances.
It says nothing about names needing to be on deeds merely receiving the proceeds of selling a house - and would suggest the OP's kids aren't eligible.
But then again - the FAQ covers using the proceeds to buy a house but what if you use other savings?...

So the rules are not clear - and may depend on circumstances, will wording etc

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759714/Stamp_Duty_Land_Tax_relief_for_first_time_buyers_-_guidance_note.pdf

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.

Norman_Castle

Rich2808 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.

Both of these relate to ownership. If ownership of the property is transferred to the beneficiary they are the owner, if it is sold from the estate then the proceeds given to the beneficiary they have never owned the property.


It would be clearer if the term first time buyer was replaced with first time owner.

There will be people who take ownership of inherited properties and could live in them for many years who have never bought a home. They could rightly claim to be first time buyers as they have never purchased a property but that is not who the first time buyer government help is intended for.

Rich2808

Norman_Castle wrote: »

Both of these relate to ownership. If ownership of the property is transferred to the beneficiary they are the owner, if it is sold from the estate then the proceeds given to the beneficiary they have never owned the property.


It would be clearer if the term first time buyer was replaced with first time owner.

It says acquiring an interest - not acquiring ownership. You acquire an interest via inheriting a share of the property - and receive the proceeds of sale via that interest. If you had no interest - you wouldn't receive a share of the proceeds when the house was sold!

I agree that the term needs changing - as the HTB/lifetime isas and the first time buyer stamp duty relief schemes are not schemes for first time buyers but first time owners (or strictly first time acquirers of an interest via a purchase or inheritance).

You might think someone would have included this question - or a variant of it - in the Q&A as its very common re many inheritances where there are several beneficiaries.

'I received an inheritance from an estate which included a house but the house was sold by the estate and I received a share of the proceeds of the house sale in cash but my name was never added to the deeds with the land registry.
Am I a first time buyer for stamp duty relief or HTB/Lifetime isa bonuses????'

Is it yes HMRC or is it no or is it maybe?

This article - also from the Guardian - contradicts the previously linked one. So even the Guardian money and property teams are a bit confused!
https://www.theguardian.com/money/2018/dec/17/do-i-count-as-a-first-time-buyer-if-i-inherit-a-share-of-a-home-abroad

masonic

As others have stated, the answer depends on whether they inherited "equal shares in their grandmothers house and it was sold to pay them out", or if they inherited equal shares in the proceeds of the house after it was sold. The wording of the will is important.

Rich2808

masonic wrote: »

As others have stated, the answer depends on whether they inherited "equal shares in their grandmothers house and it was sold to pay them out", or if they inherited equal shares in the proceeds of the house after it was sold. The wording of the will is important.

Are there examples of where HMRC has asked to see wills to evidence eligibility? I expect the above differentiation is as clear as mud to most lay people - possibly even some solicitors - and HMT/HMRC are apparently giving inconsistent advice to the Guardian!

You might never even have seen the will - or don't have a copy if the inheritance was years ago and you no longer have dealing with the solicitor who handled it. And that is before you factor in laws/rules abroad given we are now a diverse country and all EU nationals are eligible for these schemes - as some inheritances will relate to inheritances abroad - and each country will have different property/probate rules.

The financial outcome is the same in both cases - as house was sold and they got the proceeds from that sale!

Perhaps the OP's kids should just claim the bonus - and if HMRC query it later they can show the first Guardian article which says that HMT (who created the rules) said they were eligible but not the second article which implies they aren't!

As Avril Lavigne once sang ' why do they have to make things so complicated?'