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House swap and stamp duty
flava
Posts: 5 Forumite
Hi
If my friend and I swapped houses would we have to pay stamp duty? His is valued at £220000 and mine is valued at £150000. Can I just give him £70000 (or agreed fee) and dodge paying the 1% stamp duty?
If my friend and I swapped houses would we have to pay stamp duty? His is valued at £220000 and mine is valued at £150000. Can I just give him £70000 (or agreed fee) and dodge paying the 1% stamp duty?
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Comments
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No. You would be buying the house at its market value to be paid for by transferring your house and then £70,000 extra."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0
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You will be paying £220,000 fo stamp duty purposes.
The fact that you pay £70,000 in cash and the rest in the form of a property makes no difference.0 -
ok, thanks.
I assume there's nothing to stop me marketing mine at £125k and my friends at £195k thus saving one lot of stamp duty?0 -
You can do that.0
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Thanks for the advice guys0
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It is a long tim since I was involved in a swap transaction, but as far as I recall in this situation, the sale price of the higher value property is the market value of the property exchanged plus the additional cash paid. You can't just assign your own values to the properties."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0
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ok, thanks.
I assume there's nothing to stop me marketing mine at £125k and my friends at £195k thus saving one lot of stamp duty?
Well, HMRC might wonder why these transactions are going through the land registry for such ludicrous prices and decide to tax you on what HMRC THINK (!) they are worth.. They ain't stupid & they do check...
However, I don't understand where you're coming from: Surely everyone's patriotic duty is to pay all such dues and taxes ..??? And all honourable & honest citizens such as people posting on MSE will gladly do so cheerfully??0 -
I think you will find that in the case of exchanges of property the figures must reflect the market values. You can maybe go for figures at the lower end of what would be reasonable for the properties in question, but that's all.RICHARD WEBSTER
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.0 -
We actually did this. Both prices were negotiated seperately, one was well over stamp duty levels, one well under and the full duty was paid on the appropriate property by the buyer of that property.
HMRC may well investigate abnormal prices so you need to be able to justify any significant reduction below what might be considered "market rate" especially when it is a linked transaction.0
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