Stamp Duty - is this legal?!

zekepes

We were tempted by a house a couple of years back that was on the market for £565K. We 'forgot' about stamp duty (LOL!!!) which would have been a whopping £22.6K on the full asking price (not that we were going to offer anything near it). Long story short but we decided to stay put and extend instead of getting a megamortgage as this really would have pushed us to the max and it just wasn't worth it.

This same house was soon reduced to £545K with another EA and sold soon afterwards. According to 'our property' it sold for £176K!!!!!!!!!!!!! We are talking a 5 bed house in a 1 acre garden - if you are lucky you may get a 3 bed semi for 176K around here.

I know that they were possibly looking to swap to a smaller home (the EA said they would be interested in swapping with ours which was worth £275K at the time) as they were buying a second home in portugal but wanted a smaller base here. The EA did hint that this could be a way round the whooping stamp duty bill - we thought that sounded very dodgy at the time.

Surely that isn't legal?! It looks like some kind of swap did go on to avoid the large tax bill looking at the sold price.

I guess it doesn't concern me now - just interested! Any ideas?

andysstuff_2

It's illegal

guppy

The Stamp Duty is payable on the consideration that was paid. Consideration isn't necessarily cash but could take other forms, e.g. property. No doubt the duty they paid reflected the market value of the exchanged property plus the cash, but this figure probably wouldn't show up on the Land Registry info

HugoSP

There is a loophole that allows the Stamp Duty to be paid on only the higher priced property. Often if two people are swapping then the buyer of the more expensive house can negotiate that the other buyer helps with the stap duty bill.

merlinthehappypig

We part-exchanged our house years ago for one with a national builder. The cost of the new house after PX was £1 and we didn't have to pay stamp duty even though the actual value of the house was over the threshold at the time.

zekepes

chriseast wrote: »

We part-exchanged our house years ago for one with a national builder. The cost of the new house after PX was £1 and we didn't have to pay stamp duty even though the actual value of the house was over the threshold at the time.

wow that is interesting!

Thank you for all your replies :beer:

Notlob

There is a loophole that allows the Stamp Duty to be paid on only the higher priced property. Often if two people are swapping then the buyer of the more expensive house can negotiate that the other buyer helps with the stap duty bill.

I believe this has been closed and full stamp duty is payable by either side. As to how the inland revenue work this out, I guess is down to the solicitor notifying them of the total price excluding PX. Remember, the EA want there fee.

We part-exchanged our house years ago for one with a national builder. The cost of the new house after PX was £1 and we didn't have to pay stamp duty even though the actual value of the house was over the threshold at the time.

I think you will find that only the builder has an exemption nowadays.

Notlob

merlinthehappypig

Notlob wrote: »

I believe this has been closed and full stamp duty is payable by either side. As to how the inland revenue work this out, I guess is down to the solicitor notifying them of the total price excluding PX. Remember, the EA want there fee.



I think you will find that only the builder has an exemption nowadays.

Notlob

That's very possible, it's not something I've had to consider in recent years. Our PX was back in 1990, just after the last crash, when no-one could sell anything. It wouldn't surprise me to learn that the Govt have closed yet another loophole that saved us a few pounds.....

dreamalittle

Of course, it could just be a data-entry error somewhere and the price should be 476k. If you're that interested, you could download the relevant docs from the land registry to check.

STAR_BUCK

ermmmm what's PX?

pcwilkins

PX = Part eXchange.

Yes it should be PE really but then you'd think it was that think you used to do at school.

Peter