Avoiding stamp duty

AnnaV

No one else is going to buy it at 255,000 so sit tight.

bristol_pilot

There is a very small risk that a clueless FTB who has never heard of stamp duty might buy it for £255k. Personally, I would take that risk and sit tight.

AnnaV

bristol_pilot wrote: »

There is a very small risk that a clueless FTB who has never heard of stamp duty might buy it for £255k. Personally, I would take that risk and sit tight.

But they would find out before exchange that they had to pay stamp duty, and are very likely to change their minds then!

doctor-dee

munroe80 wrote: »

I am in the process of buying a new house in the very annoying price range slightly above the £250,000 mark which of course is now being slapped with a 3% stamp duty levy. The vendor WILL NOT accept £250,000 but seems to be persuaded by an extra £5,000, which, for me will mean an extra £10,000 with the sudden increase in stamp duty. :mad:This charge would really really be stretching my budget and I don't think I could only go on with the sale if there was some way of avoiding the stamp duty increase. The vendor says he will accept the extra £5,000 in cash but I'm afraid this would be tax 'evasion' rather than tax 'avoidance'. Anybody any ideas?
P.S. the house is somewhat unfinished, with a lot of outside groundwork to be done and fireplaces to be added etc. There are no 'fixtures and fittings' as it is a new house which hasn't been lived in yet...

How about offering £260k and ask the vendor to contribute 2% of the stamp duty? They effectively get a sale for £254,800, you pay the extra £5k but still only pay 1% stamp duty - £2600. HMRC get their stamp duty - it's not avoided/evaded. Your solicitor will simply hold back enough money to cover the vendor incentive before forwarding on the balance to their solicitor. Mortgage lendor shouldn't mind as long as it doesn't take you above a loan to value threshold you may need for a particular product.

dippy

doctor-dee wrote: »

How about offering £260k and ask the vendor to contribute 2% of the stamp duty? They effectively get a sale for £254,800, you pay the extra £5k but still only pay 1% stamp duty - £2600. HMRC get their stamp duty - it's not avoided/evaded. Your solicitor will simply hold back enough money to cover the vendor incentive before forwarding on the balance to their solicitor. Mortgage lendor shouldn't mind as long as it doesn't take you above a loan to value threshold you may need for a particular product.

Hi

There's a problem with the maths. I think you got confused by the classic "false-sum" problem.

The 2% contribution of the seller to stamp duty can only do that, go to the stamp duty. It can't be used to bring down the money paid by the buyer.

So in your case, the OP will really be paying £260K, not something he would want.

There's no free lunch! :rotfl:

sonastin

You could say "sure I'll give you £5k in cash but don't put anything in writing because I don't want to be liable for the extra stamp duty". Nothing in writing = no proof you agreed to it. But the seller will know where you live so not recommended.

You could say "I'll pay £255k for the house if the vendor pays the increased amount of stamp duty. Or we can agree on £250k and no more". If the vendor does the maths, he'll see he's better off with £250k.

Or you could say "don't be stupid. that would be illegal. I don't want to pay another £5k for the house, let alone the extra stamp duty on top of that. My offer is £250k and no more. Take it or leave it". The vendor will have to wait for a really stupid buyer to choose his house before he gets anything more than that so he'll probably come round to accepting your offer eventually.

doctor-dee

dippy wrote: »

Hi

There's a problem with the maths. I think you got confused by the classic "false-sum" problem.

The 2% contribution of the seller to stamp duty can only do that, go to the stamp duty. It can't be used to bring down the money paid by the buyer.

So in your case, the OP will really be paying £260K, not something he would want.

There's no free lunch! :rotfl:

You're right. Sorry, when posting I assumed the OP would be able to raise the mortgage on £260k, but doesn't have / doesn't want to stump up cash for the increased stamp duty. (don't know why I assumed this, sorry OP)

googler

I can't help feeling the seller contribution of 2% is unfair.

If the buyer really wants the house, isn't it a fairer deal for the buyer and seller to pay 1.5% each?

Why should the seller pay ALL of the excess?

doctor-dee

googler wrote: »

I can't help feeling the seller contribution of 2% is unfair.

If the buyer really wants the house, isn't it a fairer deal for the buyer and seller to pay 1.5% each?

Why should the seller pay ALL of the excess?

To secure a sale?

timmyt

munroe80 wrote: »

I am in the process of buying a new house in the very annoying price range slightly above the £250,000 mark which of course is now being slapped with a 3% stamp duty levy. The vendor WILL NOT accept £250,000 but seems to be persuaded by an extra £5,000, which, for me will mean an extra £10,000 with the sudden increase in stamp duty. :mad:This charge would really really be stretching my budget and I don't think I could only go on with the sale if there was some way of avoiding the stamp duty increase. The vendor says he will accept the extra £5,000 in cash but I'm afraid this would be tax 'evasion' rather than tax 'avoidance'. Anybody any ideas?
P.S. the house is somewhat unfinished, with a lot of outside groundwork to be done and fireplaces to be added etc. There are no 'fixtures and fittings' as it is a new house which hasn't been lived in yet...

the sellers house is too expensive for you, so buy a cheaper one, not the sellers fault you cannot afford it, and good for them that they have a house worth over the £250k threshold