Is your house worth 260-310? Would you pay 2% stamp?

silk_2

kmmr wrote: »

You maybe haven't been made aware of linked transactions before, so they do get to know.


We aren't say they can't do it - we are saying the mortgage company will take it into account as a reduction in price. (And hence, your LTV will change)

I'm joining marinsurrey for a lie down. :rotfl:

Yes I'd never heard of linked transactions, so it's been educational.

Now I need to get my head around how it'd ever be possible to do this, since the LTV reduces.. you'd need a bigger deposit, which is the same as paying stamp? Then how/why does anyone do it.. argh..

kmmr

This may be a troll, but regardless it has been fun!

As I said ages ago, if there is a way to do this effectively, then I am all in.

silk_2

kmmr wrote: »

This may be a troll, but regardless it has been fun!

As I said ages ago, if there is a way to do this effectively, then I am all in.

It hasn't been a troll.. I've never bought a house. Well, technically I have but from my parents, beneath any stamp brackets, so without much of this rigmorole.

And honestly giving the taxman 9k just to buy an average house just destroys my soul.. isn't really about being able to afford it. I mean if 9k was pocket change I wouldn't care, but it's about 20% of my savings. In a sensible world there'd be an option to pay in installments.. or y'know, the 3% tax would be applied to the portion over the 250.

kmmr

silk wrote: »

Yes I'd never heard of linked transactions, so it's been educational.

Now I need to get my head around how it'd ever be possible to do this, since the LTV reduces.. you'd need a bigger deposit, which is the same as paying stamp? Then how/why does anyone do it.. argh..

[STRIKE]It's not quite the same. The advantage is that if you pay it you need it in cash rather than mortgage. Each £1 of your cash gets you £9 of the banks as a mortgage.

So if you have £30k, you can borrow £270k. If you have £20k, then you only get £180k. [/STRIKE] (Removed as wrong, but works for new builds I think.)

If the vendors pays the stamp duty for you (somehow) then you get to use all your cash to get money from the bank. Let me try to work though it (I'm working it out as I go - so may be errors).

Vendor pays tax:
£300k agreed. Vendor pays stamp duty
£291 mortgage valuation.

Bank provides: £261.9k
You provide: £29.1 + £9k = £38.1 in cash.
Vendor pays taxman £9k

Buyer pays tax:
£291 agreed.
£291 mortgage valuation

Bank provides £261.9
You provide: £29.1 + 8.73 = £37.83
You pay taxman £8.73k

Oh, that logic doesn't work at all. :mad: (stupid maths) Lets try

Buyer pays tax at £300k:
£300 agreed.
£300 mortgage valuation

Bank provides £270
You provide: £30 + 9 = £39.0
You pay taxman £9k

So it is cheaper for you than offering a proper £300k bid, but I'd guess we all knew that.

hmm... Maybe it only really works when the bank allows the full value to be used (as in new builds). So - no I don't know why they do it!! Maybe it makes it sounds better/cheaper.

Don't forget, the winner here is the taxman! Higher value = higher tax.

silk_2

kmmr wrote: »

We aren't say they can't do it - we are saying the mortgage company will take it into account as a reduction in price. (And hence, your LTV will change)

I'm joining marinsurrey for a lie down. :rotfl:

So let me compute this once and for all..

I offer 300k, seller pays 9k stamp, so
LTV is 291 - 10% = £261,900
My deposit will be lower cos of the new LTV = 29,100 (900 less)

But I've offered 300 so I need to find 9k somewhere to complete the deal.

Which like people have said all along (without first explaining the link thing) is pretty much the same.. apparently just 900 saving on deposit - which I can achieve just as easily by securing a deal of a normal 291k offer and paying stamp.

So now I "get it", I have one other question.

Why/how are people out there doing this? It doesn't sound like they are doing it illegally.

edit: Just seen your reply. Yeah.. I think I'll just save up a bit more for the comfort factor, get as nice a house as possible and weep quietly after the purchase. Or maybe wait a while to see if anything changes with stamp.

tim123456789

silk wrote: »

We can afford it, we can demonstrate this, and we have a MIP.

The fact is we don't want to "spend" 9k on "nothing" .

It's not on "nothing", its paying for new schools, hospitals, roads etc

tim

kmmr

tim123456789 wrote: »

It's not on "nothing", its paying for new schools, hospitals, roads etc

tim

Agreed - tax is the price of living in a civilized society. It's not always spent well, but I agree with tax in principle.

kmmr

silk wrote: »

So let me compute this once and for all..

I offer 300k, seller pays 9k stamp, so
LTV is 291 - 10% = £261,900
My deposit will be lower cos of the new LTV = 29,100 (900 less)

But I've offered 300 so I need to find 9k somewhere to complete the deal.

Which like people have said all along (without first explaining the link thing) is pretty much the same.. apparently just 900 saving on deposit - which I can achieve just as easily by securing a deal of a normal 291k offer and paying stamp.

So now I "get it", I have one other question.

Why/how are people out there doing this? It doesn't sound like they are doing it illegally.

edit: Just seen your reply. Yeah.. I think I'll just save up a bit more for the comfort factor, get as nice a house as possible and weep quietly after the purchase. Or maybe wait a while to see if anything changes with stamp.

Note that the vendor is £9000 worse off (for your £900 up-front saving) and the tax man wins by a few hundred. So there isn't much incentive for the vendor, unless he CAN'T sell at £300k. So, clearly, the property is not worth £300k.

Re stamp - it's not going to change IMHO. Why?
1. It's the easiest tax ever for the government to manage. It's collected by solicitors, and comes in lovely big lump sums.
2. It's a tax on wealth. The more you have the more you pay. The poplace like to tax the rich.
3. If it did change, it wouldn't change how you'd like it. In order to keep the tax take about the same, the lower threshold will drop significantly (possibly to zero). So it would be something like
1% up to £125k
plus
3% for £125-£250
plus 4% for £250 - £xx

etc. See Australia stamp duty rates that work on a marginal basis.

Reducing the lower thresehold to zero or close to it would be political suicide. And those at the upper end will probably pay less. Also political suicide!

silk_2

kmmr wrote: »

Reducing the lower thresehold to zero or close to it would be political suicide. And those at the upper end will probably pay less. Also political suicide!

But the average house price in many places (like here) is above 250k.. it's not for the rich at all, though with such a hefty cost you would think so.

Dan-Dan

silk wrote: »

But the average house price in many places (like here) is above 250k.. it's not for the rich at all, though with such a hefty cost you would think so.

The perception of what `rich` actually means , could be debated from now till eternity