Paying into a LISA just before you need the money to purchase a property 27 February at 10:14AM in ISAs & tax-free savings 4 replies 127 views

jagu

My daughter will be buying her first property in April. She has a LISA. The LISA rules allow her to make a £4,000 payment to her LISA in the 2023-24 tax year and receive a £1,000 bonus. Does she need to delay her purchase until the bonus has been paid into her LISA, or is it sufficient that she makes the £4,000 payment, and then withdraws what's there to fund the purchase? If the latter, can she then just withdraw the £1,000 when it arrives? Thanks.

eskbanker

She'd need to delay her purchase if she wanted to access the £1,000 without penalty, so that would mean pushing completion back to the end of May or beginning of June, or she could just go ahead with the purchase in April and benefit from £750 a few weeks later?

jagu

I don't understand why she could get £750 a few weeks later? What is the rule, exactly?

eskbanker

jagu said:

I don't understand why she could get £750 a few weeks later? What is the rule, exactly?

In order for money to be withdrawn without penalty (before 60), it has to be put towards the purchase of a first property, so if the property purchase has already happened then withdrawing the £1,000 bonus would be penalised by 25%, leaving £750.

jagu

Thanks for that explanation