Stamp duty - is this allowed?

Mrs_SCW

Hi guys
We are looking to buy a property and have seen one that we like. We would like to make an offer for 265,000.
As stamp duty increases beyond 250,000 I was wondering if we could offer 250,000 for the house and 15,000 for the fittings (eg carpets, curtains, fitted appliances) to avoid the extra stamp duty.

Has anyone ever heard of / or done similar?

Simon_gloster

It is heard of......but a bit messy.

The solicitors involved will work the purchase price as this is submitted th HM land registry.

Your in effect asking a solicitor to avoid paying SDLT when their duty is to carry out the transaction in accordance with law. The sols ability to carry on trading may be in question if caught and knuckles sliced open by the Law Society.

That said, it has happened, but I wonder if Holly is around to nail this.

Yorkie1

In principle, it is possible to do this.

In practice the £15K is far far too much for what you're suggesting. You need to look at second hand ebay prices for things, not what they cost brand new.

And because you are buying at the threshold of a stamp duty, HMRC will scrutinise the list of 'extras' closely so the chances of you getting away with an inflated price are slim.

ACG

Agreed, its possible but i think you would be hard pushed to find a lender prepared to do it.

Ive seen other ways - ie the buyer pay the estate agents and solicitors costs but i think £15k is too far to get away with.

Dave_Ham

I do not think this is sensible.

At £255k maybe, but at £265k it is transparent and obvious..

You need to be able to detail £15k of specific fixtures and fittings..

Good luck

Senior_Paper_Monitor

You cannot separate fixtures and fittings !!!!

You can separate chattels.

A free standiing cooker is 'chattel' - an integrated unit is not.

Light fittings, curtain rails, electrical fittings are 'fittings'.

This is a very dangerous area quite likely to be caught out and cause endless grief.


Incidentally (ACG) - meeting the liabilities of the vendor (solicitors etc) is expressly forbidden in the relevant SDLT legislation in terms of avoiding liability for the tax.

Thrugelmir

Offer £250k for the property.

Why pay an additional £5k of stamp duty? As it money you'll never recover.

The vendor will struggle to sell the property if the price is close to the threshold.

holly_hobby

Hi there ...

What would be the items you would nominate as extras ?

Such items can not be classed as fixtures and fittings in the sales details i.e you wouldn't expect the Vendor to remove the fitted kitchen if you don't pay extra, or their super duper shower cubicle, etc, etc...

So you are looking at otherwise removal items that wouldn't ordinarilly form part of the internal fixtures of the property, such as curtains, carpet, blinds, furniture, removeable sheds, etc, etc ... you get the general idea. So essentially you would be looking to justify 15 grands worth of the above .. very tricky !!

Now there are a few issues with your plan ...

Firstly you need to be aware that in stating the purchase price of the property is actually £250k (to keep the SDLT at 1%) - it is this figure that the survey and mortgage (with max ltvs) will be based on - which may cause you an issue with your max available mge and deposit, with the possability of extra personal capital required to meet the agreed sale price.

Secondly, (if no such purchases are forming the contractual sale, which appears to be the case), and whilst you may be happy to fly by the seat of your pants, you are also asking the Vendors to participate in your deception of HMRC - as the terms of the sale, ie purchase price, whats included in the sale price, whats a negotiated extra etc, will need to be documented by their conveyencer .... so we now have another 2 parties whom will need to be involved in you executing your plan of attempting to pay 1% SDLT instead of the actual liability of 3%.

Personally, I don't believe the Vendors would agree to this, and I certainly don't expect their or your conveyencer (if aware of the situation) to agree to be party to the deception.

You may want to tread very carefully in even suggesting this to the Vendors, with my own view being that you knew about the SDLT before you started looking at properties in this price bracket.

Accordingly instead of trying to avoid the charge (which will require the involvement of others), just accept this as the appropriate fee and enjoy your new home (with you remaining the right side of HMRC .. who can be very robust in pursuing tax evasion of any kind !)..... you have been (gently) warned !!

Hope this helps

Holly x

Edit - little correction of a mis-type re SDLT well spotted and highlighted (with thanks) by SPM :T - can I assure peeps that I DO know the SDLT tables ..... :rotfl:..... honest .... scouts honour !! .. ... and it genuinely was a mis-type ... !!!
.

Senior_Paper_Monitor

Holly,

"so we now have another 2 parties whom will need to be involved in you executing your plan of attempting to pay 1% SDLT instead of the actual liability of 2%."

..... it's 1% or 3% - other than that we agree totally

holly_hobby

Cripes ... how the hell did I miss that - sausage fingers and obviously a mis-type in my humble defence of a shockingly poor proof read ... !!!

Duly corrected ...

Holly

Senior_Paper_Monitor

2nd bottle of wine ?