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  • FIRST POST
    • ADogCalledZack
    • By ADogCalledZack 15th Apr 19, 10:37 AM
    • 2Posts
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    ADogCalledZack
    Help to buy ISA question
    • #1
    • 15th Apr 19, 10:37 AM
    Help to buy ISA question 15th Apr 19 at 10:37 AM
    Obviously I could ask my bank or a mortgage advisor this, but I thought I'd see if anyone here would know.

    My partner and I are soon going to be in a position to save for a house purchase. We've been together for over a decade, and are currently living in a home owned (mortgage free) by my partner's parents. We would like to buy this home.

    We are in the incredibly lucky position of my partner's parents offering to sell us the house for half price!!! It is worth around 130k and they are willing to sell it to us for 65k.

    My question is, would this affect us using Help To Buy ISAs in any way? We are otherwise eligible, first home, etc... but I am wondering if the parent's offer will affect it in any way?

    For example, would it be considered as giving us 50% equity and selling the other 50% for it's real value? Or would it be considered as selling 100% equity just for a stupidly low price? I don't know. Would being given 50% of the house affect our ability to claim the interest from the ISAs?

    Thanks for your time. If anyone has been in a similar position then let me know.
Page 1
    • eskbanker
    • By eskbanker 15th Apr 19, 1:19 PM
    • 10,090 Posts
    • 12,154 Thanks
    eskbanker
    • #2
    • 15th Apr 19, 1:19 PM
    • #2
    • 15th Apr 19, 1:19 PM
    Can't see any impact on use of HTB ISAs, provided the sale is properly conducted via qualified conveyancers, etc. HTB ISAs can only be used for purchases where the property purchase is below 250K (outside London) so the reduced price will be applicable for that comparison, but mortgage lenders will be evaluating a loan against the actual valuation of the property....
    Last edited by eskbanker; 16-04-2019 at 9:29 AM. Reason: Typo
    • masonic
    • By masonic 15th Apr 19, 7:50 PM
    • 11,556 Posts
    • 9,196 Thanks
    masonic
    • #3
    • 15th Apr 19, 7:50 PM
    • #3
    • 15th Apr 19, 7:50 PM
    I can't see there being a problem. The vendor is at liberty to accept an offer that is below market value. People buy homes at auction for a fraction of their market price. Banks will be happy to grant a mortgage at a low LTV.

    Do check the extra costs of an at-arms-length sale don't outweigh the savings of using your HTB ISAs though.
    • ADogCalledZack
    • By ADogCalledZack 15th Apr 19, 10:55 PM
    • 2 Posts
    • 0 Thanks
    ADogCalledZack
    • #4
    • 15th Apr 19, 10:55 PM
    • #4
    • 15th Apr 19, 10:55 PM
    Thanks both.

    Masonic, what do you mean by your last sentence? I don't know what an "at arm's length sale" or what costs that might incur.
    • masonic
    • By masonic 16th Apr 19, 5:39 AM
    • 11,556 Posts
    • 9,196 Thanks
    masonic
    • #5
    • 16th Apr 19, 5:39 AM
    • #5
    • 16th Apr 19, 5:39 AM
    Masonic, what do you mean by your last sentence? I don't know what an "at arm's length sale" or what costs that might incur.
    Originally posted by ADogCalledZack
    I use the term loosely because a sale between parents and a sibling at half the market price could never be considered to be at arms length, so there are obvious ramifications to inheritance tax and deprivation of assets if either of the parents die or need state funded care in the years following the transaction. I presume none of this is likely and both of the parents are fit and healthy.

    The extra costs I refer to are the costs associated with you and your parents having to be represented by separate solicitors and both incur separate legal costs associated with the sale, rather than a simpler process where the property is privately transferred into your names.
    • badger09
    • By badger09 17th Apr 19, 9:40 AM
    • 6,804 Posts
    • 6,398 Thanks
    badger09
    • #6
    • 17th Apr 19, 9:40 AM
    • #6
    • 17th Apr 19, 9:40 AM
    I use the term loosely because a sale between parents and a sibling at half the market price could never be considered to be at arms length, so there are obvious ramifications to inheritance tax and deprivation of assets if either of the parents die or need state funded care in the years following the transaction. I presume none of this is likely and both of the parents are fit and healthy.

    The extra costs I refer to are the costs associated with you and your parents having to be represented by separate solicitors and both incur separate legal costs associated with the sale, rather than a simpler process where the property is privately transferred into your names.
    Originally posted by masonic
    And Capital Gains Tax (parents)
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