house part exchange/swap tax question

looby-loo_2

This must have happened to others so I hope someone knows please.

I have been to look at a bungalow which I want, coincidentally the seller wants to move to our lane and is interested in house. Both are similar price.

If we did a swap would we just change the deeds, via solicitor of course, but would we still need to pay the 'moving tax'?

Or, if we swapped but we had to pay them £25,000 which is the difference if they don't come down a little, would we pay no tax because it's under the first tax band or would we pay the tax on the whole lot?

If the tax were saved by swapping we could offer the asking price and we would save EA fees as ours isn't on the market yet so it would be ideal. I get the feeling this wont be the case:rolleyes:

rach29

I'm no expert but as I understand it the tax woould still be payable. The solicitor must inform the tax man that the transfer of deeds has taken place & the appropriate tax paid.

I'm certain some legal Eagle will come along to confirm this.

Look on the bright side though, you wont have to pay EA fees, do hundreds of viewings etc.

Bossyboots

No that won't be the case, you would still have to do the transfer document and you won't actually be swapping but buying each other's houses. Even if you did it on the basis of only physically exchanging the balance the transaction itself still has a value over the stamp duty limit and you have to declare this.

However, you would still be saving a whopping amount on estate agents fees so you have some leverage on agreeing prices.

shockingmoment

I'm sure your right.... but why?

Who says what the value is? Why can't they agree to buy and sell at 1p and £20000?

Less than the SD threshold, so no SD to pay. The houses do belong to them so the value is what they choose to apply?

eg I could put my house on the market for £3m, but it wouldn't sell. But that £3m is my valuation. Equally, I could put it on at £1.

Bossyboots

shockingmoment wrote:

I'm sure your right.... but why?

Who says what the value is? Why can't they agree to buy and sell at 1p and £20000?

Less than the SD threshold, so no SD to pay. The houses do belong to them so the value is what they choose to apply?

eg I could put my house on the market for £3m, but it wouldn't sell. But that £3m is my valuation. Equally, I could put it on at £1.

Its a nice idea but HM Revenue and Customs will instantly sniff this out as tax evasion. Even at the £250,000 border, transactions have to be seen to be market value. You cannot sell your £3m home for less than £250,000 to avoid the tax.

There is a clear property market and valuation system in place. You can sell your property for 1p if you like, but you will still have to declare that the transaction was more valuable and you will not be able to prove otherwise.

You wouldn't get a mortgage company to play ball with that either, nor any solicitor who wants to stay out of prison as they will be obliged to report this transaction.

looby-loo_2

Thank you - I thought that may be the case but was just asking/hoping.

On the bright side we will save EA fees and lots of viewings - I hadn't thought of that.