HMRC SDLT: Definition and Criteria for First-Time Buyer Status Under FA03/SCH6ZA/PARA6
Definition of a First-Time Buyer
To qualify as a first-time buyer, an individual must not have previously acquired a major interest in a dwelling or similar interest in land anywhere in the world. This includes acquisitions by inheritance or gift. Certain exceptions apply, such as acquiring a lease with less than 21 years remaining. Joint purchasers must all meet these criteria. Ownership of non-residential property does not affect first-time buyer status unless a dwelling was later constructed on it.
- A first-time buyer must not have previously owned a major interest in a dwelling globally.
- Acquisitions by inheritance, gift, or alternative finance schemes are included.
- Joint purchasers must all be first-time buyers to qualify for relief.
- Ownership of non-residential property does not disqualify a first-time buyer unless a dwelling was added.
- Previous ownership of a part share in a dwelling disqualifies an individual as a first-time buyer.
- Married or civil partners are assessed individually unless both are purchasing.
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Read the original guidance here:
HMRC SDLT: Definition and Criteria for First-Time Buyer Status Under FA03/SCH6ZA/PARA6
Definition of a First-Time Buyer
Understanding First-Time Buyer Status
To qualify as a first-time buyer in the UK, you need to meet specific criteria. A first-time buyer is an individual who has never owned a significant interest in a home or land anywhere in the world. This rule applies regardless of the property’s value.
Key Criteria for First-Time Buyers
– Ownership History: You must not have previously owned a major interest in a dwelling. This includes any property acquired through:
– Purchase
– Inheritance
– Gift
– Financial arrangements made by a bank or other financial institution on your behalf through an alternative finance scheme.
– Exemptions: There is an important exception to this rule. If you have only acquired a lease on a property that has less than 21 years remaining, this does not count against your status as a first-time buyer.
Joint Purchases
If you are buying a property with other people, every buyer in the group must meet the first-time buyer criteria. This means:
– Every individual involved in the purchase must have never owned a significant interest in a home or land.
– For instance, if Person A buys part of a property from Person B, both A and B are considered buyers of that property. This scenario disqualifies both from being considered first-time buyers since they own a joint interest.
Spouse or Civil Partner Considerations
When only one partner in a marriage or civil partnership is buying the home, you do not need to check if the non-buying spouse or civil partner has ever owned an interest in a home. This is different from assessing eligibility for higher tax rates, where the history of ownership by both partners needs to be considered.
Ownership of Non-Residential Property
You can still be a first-time buyer even if you have owned non-residential property or property that mixes residential and non-residential uses, provided that:
– The non-residential property did not include any dwelling.
– If you owned non-residential property but later built or adapted it into a dwelling, this does not affect your first-time buyer status.
Previous Acquisitions Affecting First-Time Buyer Status
If you have previously owned mixed-use property that included a significant interest in a dwelling, this means you are not considered a first-time buyer.
Similarly, if you have ever owned a part share of a dwelling, even if it was just a minor percentage or share, this also means you would not count as a first-time buyer.
Special Cases: Trusts and Settlements
To find out how previous acquisitions through a trust or settlement can affect your first-time buyer status, refer to sections SDLTM29855 to SDLTM29861. These sections provide in-depth information regarding how these types of ownership can impact your eligibility.
Summary of Key Points
– A first-time buyer must not previously own a significant interest in any property.
– There is an exception for leases with less than 21 years remaining.
– All joint purchasers must satisfy the first-time buyer criteria.
– Non-residential property ownership does not hinder first-time buyer status if the property did not include a dwelling.
– If there is any previous ownership of a major interest in a dwelling, the individual does not qualify as a first-time buyer.
By understanding these guidelines and criteria, potential buyers can better comprehend their status and eligibility for first-time buyer relief. It is important for anyone looking to buy their first home to be aware of these rules to take full advantage of available benefits and reliefs.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Definition and Criteria for First-Time Buyer Status Under FA03/SCH6ZA/PARA6
