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£250k house plus £2-5k chattels
hedgehopper_2
Posts: 149 Forumite
Hi all
I saw a similar thread here, but am wondering if our situation and the lower amounts involved will make any difference to the legal situ.
We are buying a property at £250k. This should mean that it is not eligible for stamp duty since we are first time buyers. However, our sellers want a further £5k for fixtures and fittings and for reasons that are significant but not important to detail here, it's now looking like the purchase may hang on this additional £5k.
What should we do? We are currently investigating the actual value of the chattels, i.e. furnishings and white goods (I know anything fixed counts towards the value of the house) and have a figure in mind as to what we think it's worth. I think it is closer to 2.5-3k than 5, and will negotiate accordingly but my main concern is how likely we really are to get into trouble as as result of this extra sale, whatever value is agreed.
Say we negotiate to £3k. Is a £250k property with £3k chattels very likely to attract attention? Should we try to agree it directly with the seller rather than putting it on the deeds? We'd really rather be above board about it, so if it DOES go on the deeds, are we asking to be investigated? While I have been able to search online for second-hand costs of some of the equipment and furniture in the house and have a rough value in mind for those items, I am sure there will be no further proof of its value than this sort of research. What should we ask to see?
What bugs me is that I feel all this is very 'underhand' but I actually don't feel that what we want to do should be viewed as tax evasion because the property has been valued at an amount that is legally not eligible, so we really do not want to end up paying it 'unfairly' as a result of this extra amount. We had initially budgeted to include the stamp duty and were willing to pay it if the valuation came back above £250k, but since it didn't, this is important to us on principle. Thoughts?
I saw a similar thread here, but am wondering if our situation and the lower amounts involved will make any difference to the legal situ.
We are buying a property at £250k. This should mean that it is not eligible for stamp duty since we are first time buyers. However, our sellers want a further £5k for fixtures and fittings and for reasons that are significant but not important to detail here, it's now looking like the purchase may hang on this additional £5k.
What should we do? We are currently investigating the actual value of the chattels, i.e. furnishings and white goods (I know anything fixed counts towards the value of the house) and have a figure in mind as to what we think it's worth. I think it is closer to 2.5-3k than 5, and will negotiate accordingly but my main concern is how likely we really are to get into trouble as as result of this extra sale, whatever value is agreed.
Say we negotiate to £3k. Is a £250k property with £3k chattels very likely to attract attention? Should we try to agree it directly with the seller rather than putting it on the deeds? We'd really rather be above board about it, so if it DOES go on the deeds, are we asking to be investigated? While I have been able to search online for second-hand costs of some of the equipment and furniture in the house and have a rough value in mind for those items, I am sure there will be no further proof of its value than this sort of research. What should we ask to see?
What bugs me is that I feel all this is very 'underhand' but I actually don't feel that what we want to do should be viewed as tax evasion because the property has been valued at an amount that is legally not eligible, so we really do not want to end up paying it 'unfairly' as a result of this extra amount. We had initially budgeted to include the stamp duty and were willing to pay it if the valuation came back above £250k, but since it didn't, this is important to us on principle. Thoughts?
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Comments
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Reduce Offer to 245k
Get quotes for new curtains carpets, fridge freezers and then compare second hand values of such. (ie: free on freecycle)0 -
Poppysarah> This won't be an option due to a previous renegotiation, which we did under bad legal advice without realising that offering them a good amount for f&f would be problematic. That's unfortunately why we feel trapped into this extra sale. My instinct was to keep the current offer but withdraw the private sale altogether, but I don't think this will be accepted.
I mean, we could try either of those options, but if I was the seller I would respond only with swearwords.
Online research has suggested it's about £2.5k for the lot.0 -
If they want £5k for their fixtures and fittings tell them to sell them on the open market.;)
Seriously, you have no chance of getting that sort of F&F value past the HMRC. Anything over £1k is likely to be seen as dodgy.
I guess you'll have to bite the bullet and pay over £250k for the property (and pay the SDLT) or walk away and see if the vendor changes their mind.0 -
If you have worked out that the furnishings are worth £2.5k then offer £2.5k and provide the sums to back it up. It's important you keep the list of items and their valuation but realistically, if the items add to £2.5k then why worry about being investigated? Make sure they're termed 'Furnishings' not 'Fixtures & Fittings'.
I bought a house in 2005 for £250k plus £5k for furnishings incl AGA, extra rooftiles, carpets and curtains and heard nothing more. Which was only fair because the value of said items easily added to £5k.
Offer them £250k for the house plus the £2.5k for the furnishings and explain that the combined effect of the mortgage valuation and the law are preventing you spending more. Any other potential buyer will be in exactly the same position.
The vendor is hardly likely to receive a better offer - no-one is going to want to pay £253k for a house given the impact of stamp duty.3.9kWp solar PV installed 21 Sept 2011, due S and 42° roof.
17,011kWh generated as at 30 September 2016 - system has now paid for itself. :beer:0 -
Seriously, you have no chance of getting that sort of F&F value past the HMRC. Anything over £1k is likely to be seen as dodgy.
.
Not being awkward here, but just interested as it is not my experience.
How do you know this? Do you have any experience in the field or is there a very recent change in the market/legislation?3.9kWp solar PV installed 21 Sept 2011, due S and 42° roof.
17,011kWh generated as at 30 September 2016 - system has now paid for itself. :beer:0 -
hedgehopper wrote: »That's unfortunately why we feel trapped into this extra sale. My instinct was to keep the current offer but withdraw the private sale altogether, but I don't think this will be accepted.
If you've not exchanged you are not trapped.
Renegotiate.0 -
BornAtTheRightTime wrote: »Not being awkward here, but just interested as it is not my experience.
How do you know this? Do you have any experience in the field or is there a very recent change in the market/legislation?
The govt is skint and will be looking for easy pickings.0 -
LandyAndy> If you are being completely serious I think I will have to stick with my original instinct and say we can't pay that extra amount. I have anxiety problems and there is no way I could live with the possibility over getting stung for this hanging over us. However
BornAtTheRightTime> I completely agree that they will not get a better offer than that. The property is real 1st time buyer country, and nobody will offer more than £250. In fact, the next person would most likely be less stupid than us and offer £245.
Since you have done this and things went OK, can you tell me how you arranged the sale? I know that some people declare everything up front on the sale agreement form, while others conduct a potentially more dodgy-sounding direct sale without lawyers involved. Which did you do, and how did you come to be satisfied with the value of the items? What proof, if any, did they provide to back it up?0 -
BornAtTheRightTime wrote: »Not being awkward here, but just interested as it is not my experience.
How do you know this? Do you have any experience in the field or is there a very recent change in the market/legislation?
The question is asked regularly on here.
For many years now HMRC have taken a keen interest in transactions around the SDLT break points. Solicitors are generally very cautious about dealing with transactions where there is any significant amount being paid for F&F that can drop a transaction into a lower SDLT band. There is a conveyancing solicitor who posts regularly on here (Richard Webster).0 -
hedgehopper wrote: »
BornAtTheRightTime>
Since you have done this and things went OK, can you tell me how you arranged the sale? I know that some people declare everything up front on the sale agreement form, while others conduct a potentially more dodgy-sounding direct sale without lawyers involved. Which did you do, and how did you come to be satisfied with the value of the items? What proof, if any, did they provide to back it up?
The original offer we made was for £250k incl everything but this was turned down, so we re-negotiated via the EA at £250k plus £5k for the Furnishings itemised. We valued the items ourselves and the sellers accepted the valuation.
This was then passed to the solicitors and all done properly. Ours told us that £5k of Furnishings was the limit he'd accept but with the list of items he was happy we satisfied any SDLT requirements. He has over 30 years of experience so we went ahead and have had no repercussions.
If you're buying a house nowhere near the SDLT limit no-one questions the value of Furnishings. Ask yourself could you verify the price of them if you were paying £300k for the house. If the answer is yes then even if your purchase is scrutinised, you have nothing to worry about IMO.
I too would be very interested in Richard Webster's advice on this thread!3.9kWp solar PV installed 21 Sept 2011, due S and 42° roof.
17,011kWh generated as at 30 September 2016 - system has now paid for itself. :beer:0
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