Q I am in a dilemma as to what to do with an inherited property. My first thoughts were to sign the property jointly over to my two daughters. However, one of them has a help to buy Isa and has been told that if she already owns property (albeit gifted to her), she would not be eligible as a first time buyer. Is this correct?
A Yes that is correct. And no longer counting as a first-time buyer would mean that she was no longer eligible to claim the help to buy Isa* bonus paid on the completion on the purchase of a first-time home. More expensively, transferring inherited property to your daughter would mean that she (and possibly her sister if she is also a potential first-time buyer) would no longer qualify for zero stamp duty land tax on the first £300,000 of a first-time home costing up to £500,000; the amount over £300,000 and up to £500,000 would be charged at 5%.
Signing over your inherited property to your daughters also seems unnecessarily complicated and expensive. It would be more straightforward – and involve just the one set of legal fees – for you simply to sell the property and share the proceeds with your daughters. It’s worth mentioning that the sooner you sell after inheriting a property, the less likely you are to face a capital gains tax bill when you sell or give it way.
* You can no longer take out help to buy Isas as they were closed to new business at midnight on 30 November 2019. If you managed to open one before that deadline, you can either continue to save in it until November 2029 or transfer the funds to a lifetime Isa which offers a different kind of government bonus and which can be used to put towards the purchase of a first-time home or kept until you are 60.