Advice re house purchase (moving money)

whatstheplan

Here's the scenario (the people are related):

Person A
Owns property outright, approx. value £75k
Has approx. £100k in ISA

Person B
Has approx. £60k in ISA

Person A wants to buy another property, value £150k.  They don't want to wait until their existing property is sold.  Proposed plan:

• Person B transfers their £60k to Person A, giving them £160k to play with
• Person A buys the new property
• The existing property owned by Person A is sold
• Person A then transfers £60k to Person B, essentially repaying them the money originally lent

Will the transfer of £60k backwards and forwards raise any alarm bells with the banks?  The intention (if asked) is to be transparent and say the money is being transferred to help Person A buy a property.  Then, to pay back the original loan.  Is this the wrong thing to say?

Basically, I would like advice if the above plan seems sound enough in terms of not raising any eyebrows with the banks?

user1977

I doubt the banks will care. Worst case scenario is having to explain what's going on, which will be easily done, surely?

But bear in mind the solicitors (acting in the purchase) will need to check the source of funds, so they'll need Person B's ID and bank statements etc, as well as those for Person A.

You do remember asking similar stuff here a year ago? The answers won't have changed.

https://forums.moneysavingexpert.com/discussion/6300740/moving-money-anything-to-be-aware-of/p1

https://forums.moneysavingexpert.com/discussion/6317772/transferring-significant-sums-of-money-between-family#latest

dimbo61

Person B will own 2 properties for a short ? period of time and therefore pay 3% extra stamp duty which they can reclaim IF they sell the current owned outright property !

user1977

dimbo61 said:

Person B will own 2 properties 

I can't see a suggestion that Person B is going to be an owner in any sense - they're just lending money.

Hedgepigs

user1977 said:

dimbo61 said:

Person B will own 2 properties 

I can't see a suggestion that Person B is going to be an owner in any sense - they're just lending money.

No, but person A will

eddddy

From a different perspective, Person B will be taking £60k out of their ISA and they won't be able to put it back in again (in one go) - so they will lose the tax benefits.

dimbo61

Sorry my mistake Person A will own 2 properties with 2 lots of council tax and other bills !

whatstheplan

eddddy said:

From a different perspective, Person B will be taking £60k out of their ISA and they won't be able to put it back in again (in one go) - so they will lose the tax benefits.

Yes this is one slight concern.  I thought with some flexible ISAs though, they do offer the option to withdraw a larger sum, in this case £60k, and deposit back into the ISA in one go, assuming it's within the same tax year?  I'm with Vanguard and will need to check the specifics of their 'flexibility', however I thought some offered the aforementioned?  I could be wrong though!

km1500

yes a flexible cash isa allows you to put back.money you have withdrawn provided in same tax year.

Section62

whatstheplan said:

eddddy said:

From a different perspective, Person B will be taking £60k out of their ISA and they won't be able to put it back in again (in one go) - so they will lose the tax benefits.

Yes this is one slight concern.  I thought with some flexible ISAs though, they do offer the option to withdraw a larger sum, in this case £60k, and deposit back into the ISA in one go, assuming it's within the same tax year?  I'm with Vanguard and will need to check the specifics of their 'flexibility', however I thought some offered the aforementioned?  I could be wrong though!

So long as the ISA is a flexible one there is no problem with withdrawing and paying back in during the same tax year.

If the current provider doesn't do flexible ISAs then start by doing an ISA transfer to a provider who does - Nationwide and Halifax are just two of the many who are flexible, and both make the transfer easy by handling it via online forms.