Avoid stamp duty with house swap? (With top-up)

Maruka

Hi folks,
We've seen something of a dream house for sale in our town, and even more exciting is that there is a real prospect that the owner would want to buy our property!

This would obviously save on estate agent fees, make arranging the move date etc. easier, but crucially I'd like to know if we'll be able to minimise stamp duty by this method?

The house in question has an asking price of £595k, and we're fairly sure an offer of £575k would be accepted. Our house, though not on the market, would have an asking price of £350k, and we feel we should get £300k+ for it (although we're not interested in selling unless to facilitate moving into this other specific property).

Now, to my mind, that means we should be able to give our house to the other party for free (or a nominal £1.00 etc), and make her an offer of £245k which she'd accept. On paper, she has therefore sold her house for £245k, saving us approx. £12k in stamp duty.

Or am I missing something? Is there some clause somewhere that will ruin our plan?

noh

SDLT is charged on the total consideration given for a property. In your example that is £245k plus the value of your house.
https://www.gov.uk/guidance/stamp-duty-land-tax-the-amount-used-to-calculate-whats-payable#calculate-the-chargeable-consideration

Maruka

Ah, thank you. That's a shame. How is the value of my house calculated though? I don't understand - surely if I wish to sell my house for £1.00, that's up to me? And likewise if the vendor chooses to accept an offer of £245k? Who in this scenario is the one who gets to say "no, this is how much you're really valuing your house at in this transaction"?

davidmcn

Maruka wrote: »

Who in this scenario is the one who gets to say "no, this is how much you're really valuing your house at in this transaction"?

HMRC will, assuming they disagree with your assessment.

booksurr

Maruka wrote: »

Or am I missing something? Is there some clause somewhere that will ruin our plan?

google not working?

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04020a

for exchanges SDLT is charged on the higher of either a) the market value of the property or b) what the consideration would be under the normal rules.

read example 2 above - such an obvious loophole was addressed long ago

either / or principle set out here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04020

BJV

Not sure if you would get away with it , BIg Brother HMRC is not silly. That said I am sure an expert will be along shortly to tell you the hows and whys.

Have to say though good on you fab idea!!!

theartfullodger

Surely it is the patriotic duty of all decent citizens to pay such tax as should be due, and pay it promptly & cheerfully?

antrobus

Maruka wrote: »

.... Who in this scenario is the one who gets to say "no, this is how much you're really valuing your house at in this transaction"?

HMRC

They're not that stupid.:)

Slinky

This sounds like a variation on the buy the house for just under the tax rate band, then pay an unrealistic price for all the carpets and curtains.

HMRC aren't stupid.

martindow

Slinky wrote: »

HMRC aren't stupid.

and solicitors would be very foolish to go along with this plan.

Good try but you'll have to pay up I'm afraid.

Maruka

Thanks folks. Apologies to whoever snarked; I did look through the .gov site but couldn't find that page, thank you for providing the link!

As for "any good patriot" - taxation is theft. I'm happy enough to pay my taxes each month for various public services and the welfare of the less fortunate, but I find SDLT an appalling, brazen cash grab from the state. Why should a private transaction between me and another allow HMRC to milk off nearly £20k? It is doubly immoral because we will need a mortgage - we're being forced to borrow money privately to pay off the state, at threat of violence. It stinks.