Using a home to buy ISA on a self build

jacklgudger

My parents are building a house for me with there money. Once built I will get a mortgage and buy the house and hope to use my home to buy ISA as a deposit. Will still be able to get the government bonus? 
As the house is a new build and for a first time build we are able to claim back VAT on the build. Can I claim back VAT and get the government bonus on the home to buy ISA?  Lastly. Is it important that I own the land prior to the build and purchase of the house or should I only purchase the land and the house once the house is built to be able to get the government bonus on the home to buy ISA. Apologies for all the questions. Thanks for any advice..

masonic

The conventional process would be for you to commission this as a self build, which you could do with your parents gifting you the money to complete the build, and of course they can manage the process for you if they wish. If you do as you suggest and have your parents do it and then sell to you, you will incur extra conveyancing fees since you and your parents will both need to be represented by different solicitors as the sale would need to be 'at arms length'. However, there are also inheritance tax considerations associated with the gifting of money to fund the build, so part or all of the gift could be considered part of their estate for IHT if they should die within 7 years.

It is unlikely you would be able to claim back VAT on a completed property you buy from your parents, but they would be able to claim it back if you (being a close relative) will use it as your home - however, I don't know if this would still be the case if the sold the property to you. You would be able to reclaim the VAT if you were the one who paid it.

The HTB ISA would be used at the point you purchase the land. Once you acquire the land, you would no longer be eligible for the HTB ISA scheme.