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Where Taxpayers and Advisers Meet

Stamp duty for first time buyers

Audie
Posts:2
Joined:Thu Jan 25, 2018 2:47 pm
Stamp duty for first time buyers

Postby Audie » Thu Jan 25, 2018 2:59 pm

My 4 children inherited part of a house in Belgium when my husband passed away. They each own 3/32 of the house(don't ask, it's Belgian law), I own the rest and also have life interest in their share. They are all in their twenties ans reaching the age of buying their own property or saving in a lifetime ISA with a view to using it to buy a house later. Does their 3/32 part ownership of the house in Belgium mean they can no longer claim to be be first time buyers and to get the associated benefits?

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Stamp duty for first time buyers

Postby AGoodman » Fri Jan 26, 2018 4:38 pm

First, is the value of each child's interest less than £40,000? That would take them out of the regime. I see no reason that the value cannot take into account your prior usufruct.

Second, you could argue that a usufruct should be treated as a trust and, if the children do not have any right to occupy or use the property under the current terms of usufruct, it should not be treated as owned by the children under Sch 4ZA para 11 (Finance Act 2003 as amended). You could well get pushback on this - HMRC treat usufructs as trusts for IHT but not for CGT/IT. There is no great rationale for the difference. I have not seen them taken any position for SDLT.

Third, unlikely to be much help but there is a further exception for jointly inherited property under Sch 4ZA para. 16. It is limited to purchases made within 3 years of inheriting the property.

Audie
Posts:2
Joined:Thu Jan 25, 2018 2:47 pm

Re: Stamp duty for first time buyers

Postby Audie » Fri Jan 26, 2018 6:20 pm

Thanks for your reply. The value of each child's share is over £40,000. I should have also said that this is not my main residence, it is rented out and because of my life interest all of the rent comes to me. Does this change any of the statements you made? Also, you said 'I see no reason that the value cannot take into account your prior usufruct'. I am struggling to understand this, could you please explain a bit more.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Stamp duty for first time buyers

Postby AGoodman » Mon Jan 29, 2018 3:57 pm

To explain, I would value the children's interests taking into account the existence of your usufruct.

For example, if the house is worth £500,000 then ordinarily a 3/32 share would be about £47,000.

However, if you are in reasonable health and they have no right to use the property or receive rent during your lifetime, their interests are not worth anything like that; depending on your age, it could easily represent a discount of 50% on the unburdened value. This is because receiving 3/32 of a property in 20/30 years is worth a lot less than receiving it now.


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