Chattels valuation: is it proportionate?

lb00

Hi all,

We are first time cash buyers in London.
We found a flat we really like in London. Asking is 650, we offered 620 which was rejected. EA has got back to us and suggested to offer 625 + 5k for chattels which would be okay for us as the house comes furnished.

This would allow us to stay below the 625k stamp duty threshold to benefit from the relief. Our only concern is to give chattels their proportionate valuation so as to avoid problems with HRMC should they investigate.

I am attaching a list of the chattels with the valuation per item. Does this look fine to you? Do you think that we could value something higher?

Thank you very much

_Penny_Dreadful

lb00 said:

Hi all,

We are first time cash buyers in London.
We found a flat we really like in London. Asking is 650, we offered 620 which was rejected. EA has got back to us and suggested to offer 625 + 5k for chattels which would be okay for us as the house comes furnished.

This would allow us to stay below the 625k stamp duty threshold to benefit from the relief. Our only concern is to give chattels their proportionate valuation so as to avoid problems with HRMC should they investigate.

I am attaching a list of the chattels with the valuation per item. Does this look fine to you? Do you think that we could value something higher?

Thank you very much

I think a lot of those chattels are already valued too high never mind making them higher. When SDLT was a slab tax the SDLT became a lot more expensive when a property was purchased for £250,000+. To reduce the SDLT some people would offer £249,999 plus a ridiculous sum for chattels to keep under the threshold. HMRC cottoned on to this years ago so I would expect your plan to raise eyebrows with your solicitor and HMRC. 

user1977

How did you arrive at those values? Most second hand bits and bobs are worth peanuts - look at eg Freecycle and the sort of things that people are (often literally) giving away. Or to put it another way, if you were buying the property empty, would the price really be £4500 lower?

YoungBlueEyes

There's no way to seriously comment on those values unless you know the original prices. "Coffee table 50" - who made it? Mr Ikea or Mr Chippendale?

I reckon _Penny_Dreadful has nailed it though. 

GDB2222

Isn't the OP taking a big risk here? The furniture is practically valueless probably. At least, I couldn’t even give used furniture away, and had to break it up and take it to the dump. 

How much is the extra SDLT if the flat is valued at £1 over £625k?

Albermarle

Can you not argue that the value of them in situ, is more than if you tried to sell them?
There is a value in being able to move into a house with most basic things already there, rather than just empty. Especially as FTB's with probably very little stuff themselves.
If you look at it that way then £3,500 does not look that excessive for all that.
Maybe HMRC would take a different view, but would they really be interested in arguing over a thousand Pounds here of there?

GDB2222

GDB2222 said:

Isn't the OP taking a big risk here? The furniture is practically valueless probably. At least, I couldn’t even give used furniture away, and had to break it up and take it to the dump. 

How much is the extra SDLT if the flat is valued at £1 over £625k?

Just to answer that last question:

FTB SDLT on £625k is £10k

SDLT on  £625,000.01p is £18.75k

So, in order to pay the seller a few £k extra, the OP is risking at least an extra £8.75k SDLT. That's not a risk that I'd take. 

If this is a property that's likely to appeal to FTBs, the seller will find there's a distinct reluctance to pay over £625k.

GDB2222

Could there be interest and penalties, as well?

p00hsticks

Albermarle said:

Maybe HMRC would take a different view, but would they really be interested in arguing over a thousand Pounds here of there?

In this case it's going to be a bit more than 'a thousand pounds here or there' though, isn't it ?

It's not just the value of the chattels, its the impact they have on SDLT. 

by my calculation (please correct me if I'm wrong), first time buyers paying £625k would pay £10k SDLT (5% on 625k - 425,001) whereas at £630k, too high to benefit from the first time buyer relief, it would be £19k ( 5% on 630k - 250,001)
Stamp Duty Land Tax: Residential property rates - GOV.UK (www.gov.uk)

I think the difference is big enough to attract HMRC's attention, as it will be pretty obvious that it's an effort to avoid a higher SDLT bill. 
  

sheramber

Albermarle said:

Can you not argue that the value of them in situ, is more than if you tried to sell them?
There is a value in being able to move into a house with most basic things already there, rather than just empty. Especially as FTB's with probably very little stuff themselves.
If you look at it that way then £3,500 does not look that excessive for all that.
Maybe HMRC would take a different view, but would they really be interested in arguing over a thousand Pounds here of there?

It depends on what condition they are in. 

Are they in good condition  or are they on their last legs?

Is the washer/dryer working?

Are the mattresses on the beds in good condition or stained? Are they comfortable and therefore usable  or will you to replace them?

alri08

I agree with others, the prices you have listed seem too high.

When I bought this place, I looked on ebay to get an idea of prices for the chattels and made an offer accordingly. I had a quick look just now and the price of a used bed and mattress is closer to 100, nothing like the 400 you put down.