Avoiding 3% stamp duty - sensible info required!

ffacoffipawb

davesanae wrote:

Hi All,

I am very interested in a property which the owner will sell for £259,000 but I'll get hit for 3% stamp duty. I have looked into this and it really seems there is NO way around this, not even if you offer to pay £250,000 for the property and make up the rest by offering to pay the sellers legal and estate agent fees, (or stamp duty on their next purchase) plus a couple of thousand for carefully itemised and valued fixtures/fittings.

Has anyone out there avoided the 3% duty successfully in the recent past and if so, how? I will even meet you and pay you £100 cash if you can help me on this - I'm that determined there MUST be a (legal) way around this!

many thanks,

Davesanae

LEGAL WAY ......

Wait 18 months and buy the same house for £175,000.

nelly_2

ffacoffipawb wrote:

LEGAL WAY ......

Wait 18 months and buy the same house for £175,000.

Good point.

Any house that has a £7500 sting attached to it, is going to be hard to sell. Just tell him to drop it or you walk. In fact with solicitors fees and everything else your probably looking at over 10 grand.

lisyloo

Any house sale just below the boundary will be highly scrutinised by the Inland Revenue. They are very aware of people trying to do this, so I wouldn't risk it.

The seller is being silly if they think anyone will buy at that price.

I agree with the other poster.
Make an offer and then walk away. It's a buyers market at the moment.

As regards the other comment about waiting 18 months - you need to recognise there is a risk, there is no guarantee of price falls, on the other hand it's risky buying at what could be a peak.
There is probably less risk in waiting.

If you pay too much now, you might regret it later, especially if prices fall.

Swiss_Toni

And just to top it off, your solicitor has to confirm that the deal isn't part if a larger sale (ie £259k), so they risk prosecution too...

(So take the vendor out for a meal, explain the situation, pay £249k for the house and a week later buy a nice bit of his own art work "Scribble on a sheet of A4" for £10k) (and let the vendor work out if they pay Income Tax on it!).

Innys

As someone else mentioned, offer £250k. If the vendor has an asking price of £259 they are ecpecting you to offer a lot less and the stamp duty threshold is the obvious amount.

If you offer it and they say they want more, explain why you won't offer it. By agreeing to pay £259k rather than £250k, it's effectively going to cost an extra £14k. They should understand that, and if they don't how unreasonable are they going to be later on down the line?

Any attempt at paying the £9k difference as a separate transaction is fraught with danger for the seller. Although you have agreed to pay them £9k as a separate amount, how do they know you'll keep to it if it isn't included in a contract? If you were in their position, would you accept such a deal?

alanobrien

davesanae wrote:

Hi All,

I am very interested in a property which the owner will sell for £259,000 but I'll get hit for 3% stamp duty. I have looked into this and it really seems there is NO way around this, not even if you offer to pay £250,000 for the property and make up the rest by offering to pay the sellers legal and estate agent fees, (or stamp duty on their next purchase) plus a couple of thousand for carefully itemised and valued fixtures/fittings.

Has anyone out there avoided the 3% duty successfully in the recent past and if so, how? I will even meet you and pay you £100 cash if you can help me on this - I'm that determined there MUST be a (legal) way around this!

many thanks,

Davesanae

There is a free book about avoiding tax on buying & selling here;

http://www.until.tv/sta05/pages/home.htm

Not looked at it myself and it sounds a bit suspect to me but since its free its probably worth a quick scan

Paul_Varjak

alanobrien wrote:

There is a free book about avoiding tax on buying & selling here;

http://www.until.tv/sta05/pages/home.htm

Not looked at it myself and it sounds a bit suspect to me but since its free its probably worth a quick scan

It is just a few pages from the book I listed earlier:

http://www.qck.com/avoid-stamp-duty.html

But you have to pay for the full book!

donsaini

i was in a similar position. i refused in principle to pay the extra 2%.

what i did was offer £247.5. this puts far enough below the stamp duty threshold to avoid too much scrutiny. they refused, so i said i'd pay (eventually after negotitian) a further £5k for fix&fittings. the cost of f&f is a very indivdual thing, i mean most kitchens,bathrooms,etc new can cost thousands of pounds so £5k isnt so unreasonable.

also i heard of someone buying a horse for £20k, to avoid going above the stamp duty threshold. comes under "chattels" i think.

also make sure the EA & vendor know what you dont want to pay is the extra £5k tax. they know its hard enough to sell a property without making harder on themselves.

also you'll probably save a few quid on valuation/survey as these seem to jump at £250k

worst case scenario, run with it at £259k, then on day of completion say you can only offer £249k + £10k f+f. then its up to them. remember they're not doing you a favour by selling ypu a house, if anything it's the other way around in this climate

hope that helps

big al

alanobrien

Paul_Varjak wrote:

It is just a few pages from the book I listed earlier:

http://www.qck.com/avoid-stamp-duty.html

But you have to pay for the full book!

Couldn't get to that one, oh well it still sounds iffy to me anyway....

loanranger_4

Innys wrote:

Any attempt at paying the £9k difference as a separate transaction is fraught with danger for the seller. Although you have agreed to pay them £9k as a separate amount, how do they know you'll keep to it if it isn't included in a contract? If you were in their position, would you accept such a deal?

In which case make sure you get the money in a brown envelope before exchange !

What's to stop you making a gift to the vendor for the difference ? Say a car, a holiday ?