This case study shows how flexible ISAs can help overcome a blockage when moving to a new house.
Stephen and Caroline, both 65, have decided to move out of their large five-bedroom family home in favour of a smaller property close to their daughter and grandchildren. They have already identified the ideal property in their daughter’s village and are keen to move as soon as possible.
- The couple’s existing home has been on the market for six months and, although there has been interest from potential buyers, they have yet to receive an offer.
- They want to get a move on and have therefore decided to buy their new home before selling the old one.
- Through prudent saving, Stephen and Caroline have built up stocks and shares ISAs worth £800,000 (£400,000 each).
- They withdraw the £400,000 required to finance the purchase of their new home from their flexible ISA accounts.
- Stephen and Caroline subsequently receive an offer for their old property and sell it three months later, still within the same tax year that they made their ISA withdrawals.
- As their ISAs are flexible, they are able to use the proceeds of the house sale to replace the £400,000 they removed from their ISAs.
- Stephen and Caroline are now happily settled in their new home, are enjoying spending more time with their grandchildren and still have £800,000 sheltered in tax-efficient ISAs (which could come in handy when it is time for the grandchildren to go to school).
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Please note that this document was prepared as a general guide only and does not constitute tax or legal advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Tax treatment depends on your individual circumstances; therefore you should not rely on this information without seeking professional advice from a qualified tax adviser.
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