FTB - stamp duty loopholes?

captainpants

Hi,

My hubby and I are FTB and have made an offer on a house that is just right for us. It was on the market for 275K and our offer of 270K was accepted. The building survey has identified essential repairs that are probably going to cost around 10K (house has no central heating and has not been modernised since built in the 1920s apart from ugly 70s kitchen). The survey valued the house at 245K so we are probably going to drop our offer somewhat in that light.

However, when we were viewing, the vendors offered to leave some of the furniture (fridge, freezer, cabinet etc) and I'm wondering what are the legalities of us offering to pay 249K for the house and then 'buying' the fixtures and fittings for around 12-15K in order to escape the stamp duty?

Given the MPs expense scandal last year, I'm inspired not to give them any more of my taxes to use on renovating their own homes.....

I'm asking here before I ask my solicitor, just getting a general response first.


Thanks

FTBFun

It will only really work if the fixtures and fittings are generally going to be worth 12 to 15k - otherwise HMRC will see right through it.

firstaspect

If the house is valued at £245k then try get it for £240k then you have £10k to play with for the fixtures & fittings to keep it below the stamp duty threshold.

googler

captainpants wrote: »

However, when we were viewing, the vendors offered to leave some of the furniture (fridge, freezer, cabinet etc) and I'm wondering what are the legalities of us offering to pay 249K for the house and then 'buying' the fixtures and fittings for around 12-15K in order to escape the stamp duty?

Get your facts straight from the horse's mouth at www.hmrc.gov.uk.

Then offer the sellers £240k plus £10k for their second-hand tat if you want....

TonyMMM

You drop your offer based on the surveyors valuation being £245k .... any mortage offer you are given is going to be based on that anyway.

....NOT on the fact that it hasn't got central heating and needs modernising ...presumably you noticed that and took it into account when making your offer of £270k ?

The fixtures and fitting idea is a non-starter ... no solicitor is going to let that one through unless you can produce an itemised list of every item being provided with realistic values (based on their current second hand state, not the new price equivalent) and somehow get it to add up to the figure you need.

poppysarah

captainpants wrote: »

Hi,
. It was on the market for 275K and our offer of 270K was accepted. The building survey has identified essential repairs that are probably going to cost around 10K (house has no central heating and has not been modernised since built in the 1920s apart from ugly 70s kitchen). The survey valued the house at 245K so we are probably going to drop our offer somewhat in that light.

HOw long has it been on the market?

You sound a bit keen to offer only 5k less than asking.

captainpants

Thanks for all the replies. Another question if you reach the end of my drivelling on....

The fixtures and fittings are definitely not worth that much - I was just wondering exactly how much you can try it on when it comes to that issue. Have been living in the UK for only 3 years so still getting to grips with HMRC rules and regulations.

As first time buyers we are absolutely clueless when it comes to offer negotiations - the house had been on the market for only 3 days when we made the offer and there had been 4 other second viewings and another offer had been made but we beat them.

We weren't planning to make an offer so soon (and thus hadn't done a lot of research, which I am catching up on like a maniac now), had only just started looking to see what's out there, but the house is perfect for us - even without the central heating which is not a huge issue (call me weird, but i'm australian and am used to living in old places with good insulation and no central heating)

And when I say 'just started looking' we'd seen about 20 houses in the surrounding area in 2 weeks so had a good idea of what was available in our budget and what we wanted from a house.

The repairs/modernising isn't a big issue - and I like the suggestion of offering 240K and then adding another 10K for F&F but to me it seems a big reduction off the original offer of 270K - is such a huge reduction in the offer at this stage a common thing? Would it be seen as taking the !!!!?

We love the house but are not so attached that we won't walk away if a deal is not struck. And the vendor is already in their new house so that would put us in a stronger position as they are really eager to sell but we can take or leave it (I think)

captainpants

:)heh heh

i like how this forum automatically censored my innocent use of a word describing a bodily function

let's see if I can type it now.... p i ss

firstaspect

captainpants wrote: »

The repairs/modernising isn't a big issue - and I like the suggestion of offering 240K and then adding another 10K for F&F but to me it seems a big reduction off the original offer of 270K - is such a huge reduction in the offer at this stage a common thing? Would it be seen as taking the !!!!?(I think)

The house was valued at 245k, I wouldn't want to pay a penny over. In the current market a lot of houses sell for 10% below asking and certainly people who price around 270-280k expect to not get many offers above 250k because of the stamp duty issue.

TonyMMM

Your surveyor has told you what the house is worth ...£245k. Any other buyer is probably going to be given a similar figure, and with the Stamp Duty threshold and an asking price of £275 the sellers estate agent must have told them they are going to struggle to get anyone to pay over the £250k mark.

If you want the house , go back in with any offer of £245 based on the valuation, and if they say no, walk away ............or go back in up to a max of £250k, but that depends on your mortgage offer and how the vaulation affects your LTV.

HMRC are very aware of the fixtures/fittings issue and will be likely to look very closely at any transactions at or around the threshold.

captainpants

Thanks TonyMMM & FirstAspect - always good to get a more experienced perspective on these things.

Will give the <250 offer a shot. Fingers crossed!