Avoiding stamp duty?

PoorDave

RabbitMad wrote:

This is perfectly legal. It is a recognised tax avoidance scheme (rather than exasion which is illegal.)

The only thing is the extra payment must be reasonable - a lovely vauge word. So if you were to be paying 124999 for a house is 4501 really the value of the carpets, curtains, shed, white goods etc. If this is a fair valuation then this is ok, if not then there is a posibility the tax man will come knocking.

Speak to your solicitor about this (however if the sale has already been agreed at 129500 then you may be scuppered)

Good luck and let us know what the blood sucking leech (sorry solicitor) says!

Agreed. People discussing this need to be really clear on this - avoidance = legal, evasion = illegal.

There is nothing wrong with legally planning your affairs so less tax is incurred. In this case you would have to be paying the approx. £5k for a written list of things where you could justify their value at 5k if questioned - this is your responsibility.

Biggles

PoorDave wrote:

Agreed. People discussing this need to be really clear on this - avoidance = legal, evasion = illegal.

There is nothing wrong with legally planning your affairs so less tax is incurred. In this case you would have to be paying the approx. £5k for a written list of things where you could justify their value at 5k if questioned - this is your responsibility.

True, but I understand the solicitors will need a list with individual valuations of items and they will really need to be justifiable. It is treated really seriously and I was advised prison is an option for the buyer & seller as well as the solicitor.

I depends what you will get for your £5k and whether it can be said to be worth £5k. If not, forget it. You've already read (above) the snags with the brown envelope method.....

I'd be inclined to talk openly to your solicitor. If they can see a way, they'll be onside. If they can't, then you'd have been chancing it anyway.

t_hamill

5k for fixtures and fittings on a property of this value (assuming that they are being left). Always bear in mind if you play with fire and get burnt, the taxman can come knocking at any time. However, if there were curtains, light fittings, a garden shed, carpets etc left 5k could be reasonably justified, although I wouldn't want to chance my arm at a much higher figure.

Bear in mind also, a reasonable sum for F&F is easily justified, a fat brown envelope constitutes potentially criminal behavior

irnbru_2

merg wrote:

Purchase of house £129,500

What price is it being marketed for?

ds1980

I dont understand?

You offer £124,995 she accepts. you give her £4k who'd ever know?

simple as that

RabbitMad

ds1980 - If you were selling a house would you trust the other party to pay up after you've completed? What would you do if they didn't?

irnbru_2

ds1980 wrote:

You offer £124,995 she accepts.

You're 4K richer ...... what's the vendor going to do?

ds1980

i thought op said they were a friend? If not then my advice is not what was stated.

If I was to do this though the people would pay the £4k but not everyone's as nasty as me!!!

DavidHM

You offer £124,995 she accepts. you give her £4k who'd ever know?

Well firstly, aside from anything else, that's clear tax avoidance, money laundering, etc. Not much chance of getting caught but a hell of a lot of effort to go to to save £1,300.

Secondly, as pointed out above - what's in it for the lender? How will they ever enforce a debt if you do a runner? Harassment? The only way the vendor could "prove" that the debt was owed was by admitting to complicity in tax avoidance - which, if the vendor has gone off on one and extorted the money out of the buyer, the buyer can plausibly deny.

Thirdly, if you have a 10% deposit you're going to need a mortgage for £116,650. If you have to take £4k out of that, instead of a 90% mortgage you now have a 92.85% mortgage against a £125k property. Increasing the LTV ratio might limit your choice of mortgage deal and that could cost you more than the stamp duty. If you don't have the £4k in cash, you have to borrow it over a shorter period of time, increasing your monthly payments.

ds1980

The point was it was between friends.

Whole different ball game if its not. £1300 is a lot of money and if it is between friends then it is no hassle at all.