Advice on using a LISA to purchase house + fixtures and fittings

owenjt

My wife and I are considering putting an offer in on a house we saw yesterday, on for offers over £450k. We both have Lifetime ISA's and would like to use these (so max purchase price must be £450k).

We'd be happy to pay more than £450k and are trying to work out if/how we can use our LISAs. The government technical guidance states that "The £450,000 maximum purchase price is worked out as the value to be paid under the sale and purchase agreement for the acquisition of interest in the land and doesn’t include the purchase of fixtures or fittings".

If it doesn’t include the purchase of fixtures or fittings, could we, for example, offer £470k and state the £20k is for fixtures and fittings and therefore use our LISAs? How do you determine what the fixtures and fittings are worth - assume we'd have to offer a reasonable price and not over inflate just to increase our overall offer?

SpiderLegs

I suppose you could do that, as long as you’re comfortable with the risk of being convicted for fraud.

steve866

HMRC are likely to flag it, people used to do it to try and avoid stamp duty.

owenjt

To clarify, I'm not trying to find a loophole or dupe HMRC, I'm asking how the LISA works when the government LISA technical guidance clearly states the £450k purchase price does not include the purchase of fixtures or fittings.

SpiderLegs

owenjt said:

To clarify, I'm not trying to find a loophole or dupe HMRC, I'm asking how the LISA works when the government LISA technical guidance clearly states the £450k purchase price does not include the purchase of fixtures or fittings.

Not sure what you are asking. 

If you buy a property over 450k you don’t get the bonus.
if you buy at £450k and pay 1k, 2k or 20k for fixtures and fittings then you do get the bonus.

steve866

SpiderLegs said:

owenjt said:

To clarify, I'm not trying to find a loophole or dupe HMRC, I'm asking how the LISA works when the government LISA technical guidance clearly states the £450k purchase price does not include the purchase of fixtures or fittings.

Not sure what you are asking. 

If you buy a property over 450k you don’t get the bonus.
if you buy at £450k and pay 1k, 2k or 20k for fixtures and fittings then you do get the bonus.

OP I think you would be hard pushed to value fixtures and fittings at a £450k house at £20k and have it been seen as legitimate. Really the LISA limit needs to increase in line with house prices. 

AdrianC

owenjt said:

To clarify, I'm not trying to find a loophole or dupe HMRC

It seems to me that you are trying to tell something less than the truth, the whole truth, nothing but the truth about the purchase price of the property in order to benefit from financial incentives that you would not be entitled to if the situation was declared accurately... Right?

I'm asking how the LISA works when the government LISA technical guidance clearly states the £450k purchase price does not include the purchase of fixtures or fittings.

So what are these "fixtures and fittings" that you will be paying £20k for on top of the £450k purchase price of the house itself?
Is £20k a fair market value for them?
If you did not want them, could you buy the house alone for £450k?

Remember, it's not just the tax man that you'll be lying to on the SDLT return.
It's also the Treasury, in applying for the LISA, and whichever financial institution it's through.
It's also your mortgage lender, and your solicitor.

dimbo61

Offer £450K as your First and final offer and explain why to the Estate agents.
You have LISA ISA,s and the max you can pay is £450K 
You are also FTB with no property to sell, deposit and mortgage in place.
Having a solicitor lined up will also show you are serious buyers.
Good luck 

owenjt

SpiderLegs said:

Not sure what you are asking. 

If you buy a property over 450k you don’t get the bonus.
if you buy at £450k and pay 1k, 2k or 20k for fixtures and fittings then you do get the bonus.

I'm asking how a Lifetime ISA works if the £450k maximum purchase price doesn’t include the purchase of fixtures or fittings.

It seems to me that you are trying to tell something less than the truth, the whole truth, nothing but the truth about the purchase price of the property in order to benefit from financial incentives that you would not be entitled to if the situation was declared accurately... Right?

Wrong.

So what are these "fixtures and fittings" that you will be paying £20k for on top of the £450k purchase price of the house itself?

Kitchen, appliances, carpets, doors, bathroom suite, boiler/heating system, tables, curtains/blinds, wardrobes, beds etc. The £20k was just an example but there's plenty of things you can call 'fixtures and fittings' which could add up.

ratechaser

There was a time when 10k for fixtures and fittings went through on the nod, including on a property we bought for 250+10 back in 2001. Cliff edge SDLT meant that there was a little more forbearance of that sort of creative accounting back then (very creative in our case as the house was pretty much a shell!).

Things, apparently, have changed since then...

steve866

owenjt said:

SpiderLegs said:

Not sure what you are asking. 

If you buy a property over 450k you don’t get the bonus.
if you buy at £450k and pay 1k, 2k or 20k for fixtures and fittings then you do get the bonus.

I'm asking how a Lifetime ISA works if the £450k maximum purchase price doesn’t include the purchase of fixtures or fittings.

You answered your own question in your original post