Paying for fixtures and fittings to avoid stamp duty

MrChips

My wife and I viewed a house at the weekend that we may be interested in purchasing. It was a little bit above the budget we had set ourselves so I have been doing some number crunching today to see what corners we could cut to make it more affordable.

The house is not a new build but has been completely renovated inside and so the interior is effectively of new build standard. It has also been completely furnished and so is sold effectively as a show home, complete with news double beds in each room, two televisions, kitchen table and chairs, all white goods, carpets etc.

It is on the market at £575k which is more than we are prepared to pay. It's still very early days and we don't know if we will make an offer or not, but if we did, it would be likely to be nearer to £515k-£520k.

My question (probably a very familiar one!) is whether we would be able to offer £500k and pay £15k for the furniture and thus pay 3% stamp duty instead of 4%? Obviously the furniture would have to be worth this, but as I mentioned it is effectively newly furnished with some very nice stuff.

This is all hypothetical but if the developers have furnished it recently, they should be able to demonstrate the value of all the fittings. Would this be sufficient documented evidence for HMRC?

Niv

I believe you can only buy items that would not be concidered part of the house (i.e not the central heating system). The items you have liste seem to qualify, however, i believe you can only pay an acceptable second hand price. Whats a second hand bed worth? £50? I dont know, but then again you dont have to convince me. £15k is alot of 'second hand' goods to find mind you.

HMRC are wise to the people trying to buy a fridge for £10k these days so tend to look at this quite closly I believe.

MrChips

Thanks - that's roughly agrees with what I had discovered via research on the web. The two TVs are big flat screen ones so they must be worth a fair bit. Anyway, I'll see if the vendor can quantify the value of the items...

muskoka

Why don't you just offer 500K for the house??? Simple. How long has the house been on the market? What have you got to lose?

G_M

HMRC are not daft - they look at properties on the threshold closely.

Have realistic prices for all the contents.

MrChips

Re bidding £500k - good point!

Re realistic prices, understood. We definitely won't be pulling a fast one - on our next viewing we'll make a note of the contents and come up with some sort of valuation...

martindow

MrChips wrote: »

Thanks - that's roughly agrees with what I had discovered via research on the web. The two TVs are big flat screen ones so they must be worth a fair bit. Anyway, I'll see if the vendor can quantify the value of the items...

Are they proposing to leave the TVs and including them in the house price? I would think it more likely they would take them when they sell.

Be careful here as most contents have minimal second hand value and HMRC could have a close look.

jockosjungle

HMRC would expect market value for second hand goods and are well aware a second hand TV is a lot cheaper than a new one. Do the sellers want to sell you all their nice furniture? They'll end up having to pay a lot for new furniture just so you can avoid a few quid in SDLT.

It is priced a fair bit above the 4% threshold so not sure the owners would have thought of doing a deal like this, especially since you are offering to buy their telly off them cheap and leaving them to buy a new one

R

Evilm

HMRC are strict on this. you are unlikely to be sucessful in finding more than £1-2k that they will allow and if you speak to your conveyancing solicitor they will advise against it.

Unfortunately you need to bite the bullet and pay up if you can't get the price down to £500k.

timmyt

£15k is a lot for second hand value in anyones house. be careful as all lawyers and both buyer and seller can face criminal sancions

Fire_Fox

MrChips wrote: »

Thanks - that's roughly agrees with what I had discovered via research on the web. The two TVs are big flat screen ones so they must be worth a fair bit. Anyway, I'll see if the vendor can quantify the value of the items...

Are they being sold as second hand TVs or brand new with full manufacturers guarantee? Ditto the furniture. You won't get away with £15K of contents unless the vendors paid a lot more than that - ask the Inland Revenue, they are very helpful.