Avoiding 3% Stamp Duty by paying for fixtures & fittings?

Lucyjane

Hi All,

I am looking for a bit of advice please. My husband and I have just about had an offer accepted on our first house. We are first time buyers so are obviously hoping to buy under £250k. The house is on for £269k and we have had an offer of £250k rejected. We have now offered to pay £250k plus £5k to the vendors for fixtures and fittings, as suggested by the estate agents, and the vendor is very keen but concerned about how this will stack up legally. My question is, are we able to legally do this?

The house is actually vacant at present after having tenants in it. It is fully furnished with sofas, beds, garden shed, pation furniture, dishwasher, washing machine, 2x fridge freezers etc to we would actually be buying the fixtures and fittings from them although I am not quite sure they will add up to £5k, although it would be close.

The estate agents now seem a little unsure if we will be allowed to do this so have asked us to speak to a solicitor, which we will do. The other suggestion they have made is to pay the vendors fees (estate agents, solicitors and removal costs) up to the value of £5k. Would this be another option?

We would also be willing to transfer the money/write a cheque to the vendors upon sale although the estate agents have said that it's not really legal so won't advise or help us on that.

Does anybody have any suggestions on how we can get about this as we really aren't able to pay stamp duty.

Thanks so much for your help!!

Woby_Tide

Lucyjane wrote: »

It is fully furnished with sofas, beds, garden shed, pation furniture, dishwasher, washing machine, 2x fridge freezers etc to we would actually be buying the fixtures and fittings from them although I am not quite sure they will add up to £5k

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If you weren't buying the house would you pay them £5k for what you are buying. I don't think you would. Neither would the taxman

G_M

This comes up regularly and the answer is.. that HMRC are not stupid!
They know people try to do exactly what you plan so they look closely at sales on/near the tax threshold.

Provided the F&F you are buying are genuinely worth what you claim they are worth, of course you can do it. But 2nd hand white goods and sofas etc have a very low real value. For an idea, take a look at how much old fridges sell for in the classified ads/ebay!

Ignore the EA - he is not an expert and is commission driven - just wants the sale to go through. Speak to a solicitor.

Lucyjane

Thanks for your advice.

What about the option of paying the vendors fees up to the value of £5k. Would this work? Also, is there any way we can simply just write them a cheque for £5k... I am guessing problaby not???

Radiantsoul

Lucyjane wrote: »

Thanks for your advice.

What about the option of paying the vendors fees up to the value of £5k. Would this work? Also, is there any way we can simply just write them a cheque for £5k... I am guessing problaby not???

It is not that easy, otherwise no-one would pay stamp duty.

Lucyjane

So we pretty much have no options at all then?

It's such a pain - they won't accept £250k and we cannot afford any more then that! We can afford to give them £5k but aren't allowed too.

CloudCuckooLand

Be careful calling them Fixtures and Fittings, as they in fact count for SDLT. It is the removable items, called Chattels, that you are referring to (both types are included on the "F&F" form)... but also, as said, you would need to be careful about the valuation assigned to them;

http://www.hmrc.gov.uk/manuals/sdltmanual/SDLTM04010.htm

"It does not matter that the parties to a transaction may agree a particular apportionment which is then documented in the contract. The apportionment will not be correct unless it was arrived at on a just and reasonable basis."


Re paying agents fees;

http://www.guardian.co.uk/money/2009/jul/01/stamp-duty-avoidance

"HMRC told me that however payment is made, paying the seller's estate agent fees means there is a "transfer of economic value from buyer to the seller" and this counts as part of the total amount of the transaction when calculating stamp duty."

http://www.hmrc.gov.uk/sdlt/calculate/value.htm

"Stamp Duty Land Tax (SDLT) may be payable when property or land is bought or transferred, whether or not the transaction involves payment of money and/or non-monetary consideration (which can include goods, services or the assumption of financial liabilities). "


Bottom line, consult your solicitor, and if they are dubious about what you want to so, then don't do it, because you would be the one having to pay extra later down the line...

CloudCuckooLand

Lucyjane wrote: »

So we pretty much have no options at all then?

Wait for a couple of weeks.

Then go back and remind them of your offer.

They should have realised, at that price, that the £250k threshold would come into play.

In fact, they probably chose £269k deliberately to appear out of reach of the threshold. Its probably only worth £250k, in reality.

Lucyjane

I might be way off here but what about if my parents (who have a different name to me after I married) paid the money to the vendors and effectively purchased the contents of the house from them? It is my partents who have agreed to lend us this £5k anyway after we saved up our deposit. Any chance?

CloudCuckooLand

Bottom line, consult your solicitor, and if they are dubious about what you want to so, then don't do it, because you would be the one having to pay extra later down the line...

Tony_R

I have just had an offer accepted for £255,000, on a house which was up for £275,000.

We initially offered £250,000 which was rejected out of hand. We then offered £250,000 + £2,000 for fixtures and fittings that was reasonable.

We saw some other houses at below £250,000 but the standard of the houe was significant. We then decided that the stamp duty was worth paying for the house and got it for £255,000. We asked our solicitor if we could offer £5000 for fixtures and he said that the HRMC would look suspicuously at it.

Although i'm a little annoyed we had to pay over £250,000 we tried to negoitiate and we are still really happy with our decision.