4

I have been using a Lifetime ISA to save towards a deposit on the purchase of my first home. Recently, I inherited a 12.5% share of the house in Germany in which my father currently lives.

The rules of the Lifetime ISA prohibit the penalty-free withdrawal of funds for a house purchase when one already owns a legal interest in a house. Would my 12.5% share therefore disqualify me from using my LISA for a home purchase, even though my stake is small, located overseas, and in a property I cannot occupy or sell?

4
  • 1
    Can you reject the inheritence? It doesn't seem to be significantly valuable given the situation and may even be a liability.
    – Vality
    Feb 4 '20 at 22:32
  • Could you ask one of your siblings (assuming they're the other owners) to buy your share? Would help more with the deposit than rejecting the inheritance (sorry, @Vality) Feb 4 '20 at 22:40
  • 3
    @RupertMorrish I'm fairly certain selling it wouldn't work. It has to be their first home: if owning a stake in the German property counts as owning a house, selling it doesn't help.
    – richardb
    Feb 5 '20 at 0:18
  • Unfortunately, I agree with rdans' answer (I was in the process of writing a similar one). The only very slight hope I can see is whether, based on "in which my father currently lives", some part of I have property in a trust, do I still qualify as a first time buyer? applies. (That page is a FAQ on Help-to-Buy ISAs, but is linked from this Government page on Lifetime ISAs).
    – TripeHound
    Feb 5 '20 at 9:01
5

Yes your inherited share disqualifies you from using the LISA for a first home, without being affected by the penalty. As I see it your options are to keep the money in the LISA to use for retirement, take the money out of the LISA and take the hit on the penalty, or if its not too late, hold off on accepting the inheritance or don't claim it at all. The best course of action will depend on how much you have saved into your LISA and the value of your inherited property.

If you've owned before – whether inside or outside the UK – you can't use a LISA towards a home purchase. This includes owning a property (or a share of one) that you inherited, even if it was sold straightaway and you didn't live there. If you owned a company or had a trust that owned residential property that you are (or were) able to live in, you're also not considered a first-time buyer.

https://www.moneysavingexpert.com/savings/lifetime-isas/

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.