Our family home is owned in common between myself, my wife and our two adult children. My question regards the additional stamp duty paid on second homes. If one of my children sells their share in the family home before they purchase a property, would they avoid the extra stamp duty?
Also, would they be classed as first-time buyers if they don’t own a share in our home anymore?
As your children have an interest in another residential property – your home – then they would have to pay the additional stamp duty if they purchased a further property, even if they will use it as their main residence.
However, if your children sell their share in your family home before they purchase their own home, they wouldn’t have to pay additional stamp duty. Also, if they buy a property and pay the extra stamp duty, then sell their interest in your home within three years they could reclaim the extra tax under current rules.
The question of whether they would be classed as first-time buyers is a little trickier, as it depends on the context. From the point of view of a mortgage lender or solicitor, a first-time buyer is usually someone with no existing mortgage or property to sell. A historic property ownership in this context may not be taken into account after a period of time, but that period since the disposal of the other property varies between lenders.
However, when it comes to Help-to-Buy Isas or Lifetime Isas, which offer bonuses to those saving up for their first home, your children would not be classed as first-time buyers.
Mike Gordon is technical director at Rutherford Wilkinson.