Avoiding 3% stamp duty - sensible info required!

davesanae · 11 May 2005 at 11:43AM

Hi All,

I am very interested in a property which the owner will sell for £259,000 but I'll get hit for 3% stamp duty. I have looked into this and it really seems there is NO way around this, not even if you offer to pay £250,000 for the property and make up the rest by offering to pay the sellers legal and estate agent fees, (or stamp duty on their next purchase) plus a couple of thousand for carefully itemised and valued fixtures/fittings.

Has anyone out there avoided the 3% duty successfully in the recent past and if so, how? I will even meet you and pay you £100 cash if you can help me on this - I'm that determined there MUST be a (legal) way around this!

many thanks,

Davesanae

Joannaclaire · 11 May 2005 at 12:11PM

Can you not make an offer of 250,000?

Pal · 11 May 2005 at 12:14PM

Stamp duty is going to cost you £7770, bringing the purchase price up to £266500. Is the house worth that?

If you made an offer of £249,999, plus a couple of thousand for F&F, would the vendor accept? Would anyone else buy the property at the higher price and pay the increased stamp duty? What is the market like in your area? How desperate is the person to move? What was his original asking price?

If you can't negotiate the price down then you have to pay the increased tax.

Stamp duty is the most stupidly designed taxes we have in this country. One of the guiding principles of taxation is that it shouldn't distort the market, and that is exactly what the house price thresholds on stamp duty do.

itgirlinuk · 11 May 2005 at 12:33PM

I have never done this, but would not be able to say £249K as your offer price + £10K towards the house they are buying as a cheque?

I think if you don't want it as part of the purchase price, then the mortgage wont cover it and you might have to give them the cheque independently. I think you should some legal advice on how to cover this contractually. I am sure you can write it into the contract saying the £10K would be paid on the same day as completion but separately.

Pal · 11 May 2005 at 12:40PM

That would be illegal tax evasion.

zag2me · 11 May 2005 at 1:25PM

If it has a garage or outer area, pay less than 250k for the house only, and buy the extra bits seperatly at a later date

dougk_2 · 11 May 2005 at 3:54PM

If you can't get it for under £250k , say you will pay the £259,000 if the vendor pays your stamp duty.

lush_walrus · 11 May 2005 at 4:03PM

Ok my advice is to try to chip away at the cost of Stamp duty by getting other people to carry some of the cost too.

IE: Get the vender to meet half of the stamp duty costs, this is often what I advise people to do. The vender should be happyish to go along with this as houses just over the tex threshold are at the moment pretty impossible to sell for that very reason. Then ask your estate agent to drop their fees by x amount to help, ask your venders to cover some of the cost too. Tell both agents that without help towards meeting these costs there will be no sale and therefore no fee for them in theory. Generally estate agents will chip in a bit to get a sale, so dont be scared just try it!

lush_walrus · 11 May 2005 at 4:04PM

itgirlinuk wrote:

I have never done this, but would not be able to say £249K as your offer price + £10K towards the house they are buying as a cheque?

I think if you don't want it as part of the purchase price, then the mortgage wont cover it and you might have to give them the cheque independently. I think you should some legal advice on how to cover this contractually. I am sure you can write it into the contract saying the £10K would be paid on the same day as completion but separately.

Definately not worth the risk, the government are on the look out for people on the threshold of 3% and have been tighter on what can be considered fixtures and fittings for exactly that reason. This is highly illegal and you risk prison, NOT WORTH THE RISK!

davesanae · 12 May 2005 at 8:35AM

Thanks everybody, though I think I will just have to accept Mr Brown will be getting his pound of flesh from me in this deal. It just seems as though it is impossible to do this - thanks for your post lush walrus but if i ask the vendor to pay some of the stamp duty that is effectively asking him to drop the price, which he just won't do. It comes down to how much do we want the place? Answer - a lot.

Thanks again,

dave

Paul_Varjak · 12 May 2005 at 9:25PM

Don't know if this book is of any use:

http://www.qck.com/avoid-stamp-duty.html

Avoiding 3% stamp duty - sensible info required!

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