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Comments
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John_M_Business wrote:I don't think this is the case. Of course it would make a house between 250k and 260k more difficult, but it would make ones above that ever-so-slightly undervalued (i.e. by about 5k).
If a house was believed to be worth, say, 275k, then perhaps it would go for 270k instead.
In theory you are right. In practice, there's a magic figure of £249,995. I sold a house for precisely that amount, which was the asking price! There's something about that extra £5k going out the window that puts people off, and they either stay below £250k or they go for something above £300k.No reliance should be placed on the above! Absolutely none, do you hear?0 -
Yes there is a way. Offer them £249,000 or walk away. It's your market now not theres. Save the 2% and the rest. Then laugh to the bank.
Better still wait 2 years and buy it for 1/2 price0 -
Slider wrote:No. You would be liable for tax evasion prosecution.
You used to be able to disguise it as fixtures and fittings, but these are now included in the stamp calculation.
You could do it all outside of the sale, but if the agent or solicitor's know, then the real price will be declared.
Is it worth the risk for the extra 2%?
Not quite! (Although I'm no expert
) Here is the excerpt from the Inland Revenue booklet: (http://www.hmrc.gov.uk/guidance/sd2.pdf)
If I buy items from the seller, do I pay Stamp Duty Land Tax on it?
Stamp Duty Land Tax is charged only on the purchase price of the land and buildings, including fixtures (such as, fitted kitchens and bathroom suites), which are part of the land as a matter of law.
However, buyers sometimes agree with the seller to pay a separate sum, on top of the property
price, for certain items (known as ‘chattels’) that the seller decides not to take with them when they move. These items include
curtains
carpets, or
other moveables.
Any apportionment of the purchase price must be on a just and reasonable basis. (My bold)
So, in other words you can still do the 'fixtures and fittings' thing by calling them 'chattels' but you can't buy a washing machine for £20,000! i.e a house selling at £123,000 could avoid stamp duty (1% above $120,000) by offering the extra £3k for the carpets and white goods, as these could reasonably be expected to cost £3000.
Hope this helps.
T0 -
Hi Twmble,
The OP was talking £14k over the £250k SDLT limit - I think the Revenue might have some difficulty with that being "just & reasonable"!!0 -
Ian is right, the taxman has no concept of "just & reasonable" when it comes to stinging us on tax
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GDB2222 wrote:In theory you are right. In practice, there's a magic figure of £249,995. I sold a house for precisely that amount, which was the asking price! There's something about that extra £5k going out the window that puts people off, and they either stay below £250k or they go for something above £300k.
So, what do you think your house would have been worth if the 3% Stamp Duty level didn't exist?? £299,000??? I doubt it.
Perhaps you thought it was worth up to, say, £265k to the 'right buyer', but actually reckoned that it was worth less than this, and therefore sold it for under the threshold because you needed to.
What I was saying is that there are plenty of homes being sold in this bracket, but not in the £250-260 region for obvious reasons.CarQuake / Ergo Digital0 -
I am going through this at the moment too. We offered 250 for the house and 5k for the fixtures and fittings. I am advised by my solicitor that we can buy fixtures and fittings, however the tax man must be happy that the value we ascribe to said f & f is reasonable.
Most importantly the value is the second-hand value, not new.
As the house has a large conservatory with made to measure blinds, plus various carpets and curtains that are being left, we should be okay.
I think if we were trying to get away with more than 5k we might struggle.
I also looked at the idea of running a separate contract to buy their tv for 3k, with a caveat that we needed to sell our house to raise the capital. Obviously if the chain collapsed we would not have raised the capital so the 3k would not have changed hands. I am advised that that idea would not be acceptable. See attached legal advice:
The parallel contract idea will not wash. The stamp duty form actually requires you to certify 'the transaction effected does not form part of a larger transaction or series of transactions...of which the aggregate amount exceeds [the relevant Stamp Duty band]'. The revenue would call this a series, even without your explicitly relating the two contracts. Second, your counterparty has clear and easily-enforced remedies if you fail to perform the property contract. I doubt he would have such easy or cheap redress if you default on the TV purchase, even if it is tied to the property purchase in some way.
Totally agree that the 3% should only be levied on the amount over 250k.0
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