Stamp duty, buying for £124,999

StuC75

To be blunt it seems like you are getting yourself further into a mess with this action.

It smacks of throwing Good Money after Bad money.

You are already owed Several thousands of Pounds, and the solution offered is for you to spend £125,000 to get that back!!

The house is not a steal at £126k, no body has come in at £140k.

Many other posts drill in that house only worth what someone prepared to pay for it, and with the stamp duty threshold at 125k, theres quite a band above £125k that many will not pay because of that initial extra cost to buy..

What would be your long term plan once bought the house, youve already said its not your type of house.. Even to sell it in the future you would have been paying the mortgage - so its costing you more... just to get those first couple of thousand back - which you wont have done since youve only paid less for the house, and taken on a further debt...

Am I alone in this line of thought??

DominicJ wrote: »

They received a £126k offer from a scam company, who I agree, would have charged them various fees, then dropped the offer at the last minute. I was perhaps being a bit pushy because they werent making much effort to sell, when the agents said £150, I said put it on the market at £140k and it took 18months for them to do so, and that spurred them to try an instant sale.

They have offered it to us at £126k, and they will pay us the £10k ish back after the sale.
For £126 the house is an absolute steal, in my opinion. Houses that fit our wants more are 200k+, but it isnt everyones cup of tea I suppose
We personally arent interested at £150,000 becuase we would rather save for the £200,000 house.

PoP
Only that they return the money they, borrowed, from us, but that would lower the price. No fixtures and fittings on top for example.
My worry was that HMRC would investigate any sale that was within the tax bill of the tax threshold, so anything over £123,750 but under £125001, and argue that the price was set to avoid tax.

DominicJ_2

To be blunt it seems like you are getting yourself further into a mess with this action.It smacks of throwing Good Money after Bad money.

To a point, I agree.
We were looking at pricier houses, in the 200-250 bracket.
Well, my partner was, I was less sure of such a commitment.
We've discussed it at length and are very happy with the house at the price.

As it is, we can move in November to her parents house, or we can move in two years to a much more expensive house.
We currently live in a former council house which we are desperate to get out of. Its not an ideal situation, but what we are doing is pretty much set, its just the how we go about it thats up for debate.

I do thank you for your concern, lots of people come here hoping someone will justify their poor decisions, I'm just hoping I'm not one of them.

If someone else buys it, great, I'll have my money back with interest.
If no one will, well, at £126k, I'll buy with my £10k back, or I'll buy at £116k with nothing back.
I'm just trying to work out the most expedient way of doing that.

What would be your long term plan once bought the house

Live there, we have managed to address a lot of concerns we had.
Ideally, we would have the money to implement those plans, but if we have to save for a few months, so be it.

Thank you for your help

StuC75

do consider that sale prices get registered and land registry - so if you were to sell in the future a prospective buyer could find out what was paid (albeit without the whole back story..) and may then want to affect the price they pay on what they feel has been done in the meantime and the 'premium' of any increase..

Most concerns with stamp duty 'avoidance' are when people are paying more - e.g. 124,995 + X amount for Chattels.

DominicJ_2

We'd be there for at least five years, probably at least ten.
The neighbours may hate us of course, but tough

JimmyTheWig

DominicJ wrote: »

Jimmy
Just to confirm.
Your saying if we buy their house for £120,000, and they then at a later date give us £5000k, the tax man would have grounds to investigate?
So presumably we must offer for £115,000 and receive nothing back?

No, you've missed the point.
The tax man doesn't need grounds to investigate. They can investigate anything they want to.

What I'm saying is regardless of whether you
pay them £126k and they give you the £11k they owe you at a later date, or
pay then £125k and they knock £1k of what they owe you and give you back £10k at a later date, or
pay then £120k and they knock £6k of what they owe you and give you back £5k at a later date, or
pay then £115k and they knock £11k of what they owe you and give you nothing at a later date
you are still buying the property for £126k and stamp duty is still due.

As far as I am aware, not paying stamp duty on any of the above would be tax evaision.

DominicJ_2

Thank you, I hadnt looked at it that way, the actual consideration paid includes the debt write off.
oh well

JimmyTheWig

DominicJ wrote: »

Thank you, I hadnt looked at it that way, the actual consideration paid includes the debt write off.
oh well

In which case I think it is definitely worth seeing if they will sell it to you for £125k.

thelem

JimmyTheWig wrote: »

In fact, I would bet anything that if they proceeded with the company they would not pay above £125 in the end.

Was that a Freudian slip to miss the k off there?

DominicJ_2

£125k agreed with some mild grumbling.

JimmyTheWig

Nice one.
That makes much more sense than £126k.