First-time buyer relief: what does it mean and are we eligible?

Question: We got married in November and we are renting a flat. We plan to buy a house next year. About 10 years ago my husband owned a flat with his sister, which they were given by their parents. His sister bought him out after three years or so. We have heard of first-time buyer relief but don’t really know how it works. Can you explain — and can we claim it?

Answer: Stamp duty is payable on residential property costing more than £125,000. However, there is a relief for first-time buyers from stamp duty where the purchase price is no more than £500,000.

If it is over £500,000, first-time buyer relief is unavailable and the standard rate of stamp duty is payable.

When a buyer is entitled to first-time buyer relief there is no stamp duty payable on the first £300,000 of the purchase price.

Accordingly, if the property costs £300,000 or less, no stamp duty is payable.

If the purchase price exceeds £300,000 but does not exceed £500,000 then the tax is payable on the amount above £300,000 at the rate of five per cent.

The relief is only available to a buyer who intends to use the property as their only or main residence and they must not, either alone or with others, have previously acquired a major interest in a dwelling anywhere in the world.

Your husband and his sister acquired their previous property by way of a gift from their parents, so he does not qualify for first-time buyer relief.

This means you cannot claim it when you buy a property together in the future.

These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.

If you have a question for Fiona McNulty, please email or write to Legal Solutions, Homes & Property, Evening Standard, 2 Derry Street, W8 5EE. Questions cannot be answered individually, but we will try to feature them here. Fiona McNulty is a solicitor specialising in residential property

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