Are there any loop holes of using the LISA for a property price only slightly above the 450k limit?

RexAma24

So me and my partner are buying a house worth 485k. I have around 22k in my LISA and to be honest the plan was never to buy anything over that and buying by myself.
However, me and my parter are putting in a 50/50 deposit at around 40%. The house price is only 35k more than the threshold. Is there any loop holes or way I can withdraw this money without getting penalties and use it for the intended use which is buying a property as a first time buyer?

MeteredOut

I'm sure someone has offered to buy a house at £450K and pay the difference between it and the "real" price later, but I can't see a vendor's solicitor agreeing to that.

So, other than fraud, I suspect your stuck.

GDB2222

That’s not really 'only slightly above the limit', so it would be quite a big loophole you are talking about. Everyone would know about it, surely? 

saajan_12

RexAma24 said:

So me and my partner are buying a house worth 485k. I have around 22k in my LISA and to be honest the plan was never to buy anything over that and buying by myself.
However, me and my parter are putting in a 50/50 deposit at around 40%. The house price is only 35k more than the threshold. Is there any loop holes or way I can withdraw this money without getting penalties and use it for the intended use which is buying a property as a first time buyer?

35k over isnt' really 'slightly' over.. people used to (incorrectly) separate out the house purchase with £1-2k for curtains etc paid separately from the solicitor / docs to reduce the price by a tiny amount back when stamp duty thresholds were cliff edges. You're not justifying 35k like that though, and no way is a seller trusting that. 

The purchase price on the paperwork would need to match between the solicitor, lender and stamp duty submission. 

The intended use was for normal budget properties, not luxury ones.. Unfortunately this is the result of governments not keeping those thresholds up with inflation. 

EssexHebridean

Thr answer is no - if you want to use the ISA money along with its bonuses then you need to buy a property within the rules for the scheme. Otherwise your option is to leave the LISA sitting for retirement, or to withdraw the funds, paying the penalty. 

theartfullodger

HMRC don't like fraud I hear, though obviously that's not the plan here.Fines, investigations, the shame of the publicity..
.

se2020

You'll 'only' loose £5,500 to withdraw all the LISA funds and that's only if you need to withdraw all of them for the deposit.

If the vendors/property did have "something" that was legitimately worth £35k, like maybe a summer house in the garden with a bbq & hot tub, you'll still have a couple of problems. 
1, if the house was originally marketed with the summerhouse included id be a little bit worried about being caught out on that. When the Lisa scheme was first launched they do say they would be auditing some purchases to ensure the rules were compiled with. Although I've not actually heard a single report of anyone checking (aside from the convancing solicitors who will check thoroughly that you are following the rules)

2, if you pay £35k in cash for the summer house does that leave you with enough cash for the deposit required?
Ie, a 10% deposit on a £485k house is £48.5k
Same deposit on a £450k house is £45k.
But you'll need the £45k plus the £35k = £80k.

There are a few other, perfectly legitimate, work-arounds. Again, relying on you having the deposit required plus the extra £35k. However,  as the withdrawal penalty is only £5.5k I'd think all the legitimate options would actually cost.you more than that in legal fees etc.

In your situation,  if that £5.5k is really that much of an issue against a £485k house, I'd just ring the estate agent, say you didn't realise you would have to pay a penalty to get the funds out of the Lisa and ask for £5.5k reduction off the asking price.