Stamp Duty

CARRIE11_2

I'm selling my house to a relative for £45k over 3% threshold. Apart from a reasonable amount being sold as 'fixtures and fittings' is there another way to transfer the remainder over to me avoiding the 3% duty going into Gordons' coffers and of course jail. Could it be put through a childs account or maybe the purchase of premium bonds?

BobProperty

In a word NO. I think your solicitor has to confirm that there are no linked transactions so you can't sell most of it now and a bit later. The value of the transaction goes to the Land Registry, so the taxman can check anyway.

Gorgeous_George

It does happen though. The house is sold for less than £250K and a lump sum changes hands separately. This may be to buy a car or antique dining table.

Illegal, I'm sure but so is speeding. I'd expect a greater sentence for defrauding teh tax office - after all £5K is more valuable than risking lives by driving too fast.

Personally, I wouldn't recommend it. Just offer a pound less than the SD threshold.

Perhaps pay it now and hope the SD is proved to be illegal like bank charges.



GG

ahll

But if you can put a house for sale on the market for any amount you want..Why can't you sell your house to a relative for the amount you want ?

Debt_Free_Chick

ahll wrote:

But if you can put a house for sale on the market for any amount you want..Why can't you sell your house to a relative for the amount you want ?

You can. But if it's over the threshold, the buyer pays stamp duty.

If you split the price into two or more transactions, expect the taxman to take a close look at your finances. If he connects the two amounts, then he'll come after the buyer later for the stamp duty.

It would be difficult for the buyer to "hide" £45k. Any financial institution will do the usual checks to satisfy the money laundering regulations and any interest earned is automatically reported to the Inland Revenue at the end of the tax year - hence, the taxman is likely to find out and put two & two together.

seven-day-weekend

>>The house is sold for less than (the asking price) and a lump sum changes hands separately<<

This happens in Spain all the time to avoid taxes payable by seller and buyer. Of course, I have no first-hand knowledge of this, nor do I know anyone who has done it.

ahll

So there is no problem if someone(a relative) sells you the house for 125000 even though it could be sold for more on the open market ?

BobProperty

ahll wrote:

So there is no problem if someone(a relative) sells you the house for 125000 even though it could be sold for more on the open market ?

First, the authorities in Spain are clamping down on this as they've realised they've been missing out on a fair bit of tax.
Now, the above quote. Yes you can agree any price you like, BUT the taxman will take an interest if he thinks there is tax being avoided. The law is that the transaction is deemed to take place at market value for tax purposes. Therefore for CGT, IHT etc. the value in the calculation is the market value. You can also get into trouble if your figures mean you just "happen", after the tranaction, not to have enough money for your Care Home, or you can now claim Benefits, etc. etc. I think it is called something like "Deliberate Deprivation of Assets".

Vincenzo

I must have missed something here?

Relative or not, why risk breaking the law for something you are not liable to pay?

Firstly you will not get away with £45k on fixtures and fittings unless you can really prove they are worth that. The other proposal of accepting the cash as a separate transaction is a risk to you, if for example your relative becomes less interested in blood and more in money (they may not pay you!).

Best to play it by the book - evasion is a criminal offence and could easily lead to a prison sentance for you and the purchaser.

If your relative cannot afford the stamp duty they should be looking at cheaper properties.

seven-day-weekend

BobProperty wrote:

First, the authorities in Spain are clamping down on this as they've realised they've been missing out on a fair bit of tax.
.

Yes, they are clamping down on it, but it still goes on as it's to both the seller's benefit (avoidance of CGT) and the buyers (avoiding purchase tax) and black market transactions are done at the lawyer's office. I don't think in this backwater of southern Spain anyone takes any notice of what they say in Madrid.:rotfl:

Vincenzo

seven-day-weekend wrote:

Yes, they are clamping down on it, but it still goes on as it's to both the seller's benefit (avoidance of CGT) and the buyers (avoiding purchase tax) and black market transactions are done at the lawyer's office. I don't think in this backwater of southern Spain anyone takes any notice of what they say in Madrid.:rotfl:

Carrie - Are you selling in Spain?

I thought we were talking about the UK? As far as the CGT goes, this would not apply to a main residence (in the UK). Also if the purchaser was buying as an investment property it would actually be a disadvantage to be seen to have paid less. At £295k They could potentially save £6,350 in stamp duty on the purchase (by showing the purchase price as £250k and paying the rest in cash), only to pay a potential extra £18k in CGT on resale.