Avoiding the 3% stamp tax?

MattyNeth

I've just had an offer for 264k accepted on a property. Is there any way I can pay the 1% stamp tax (i.e. property officially goes through at 250k), and pay the 14k to the person selling the property cash, and give the estate agent the difference he'd miss out on. I'd be quids in still I think?

Slider

No. You would be liable for tax evasion prosecution.

You used to be able to disguise it as fixtures and fittings, but these are now included in the stamp calculation.

You could do it all outside of the sale, but if the agent or solicitor's know, then the real price will be declared.

Is it worth the risk for the extra 2%?

Innys

Slider is right.

Also, don't try to offer £250k for the house and the extra £14k for "fixtures and fitting" - the Revenue have got wise to that wheeze as well and your lawyer is, I believe, legally obliged to inform them of the full value of the purchase.

You could try and pay £14k to the vendor for them for buying something totally unrelated, say a car, but there is a risk you may still be found out. Also, the vendor may not be keen to do a deal as if you do the dirty on them, they have nothing legally binding.

theGrinch

offer £250k

lin473

We had exactly the same situation when we bought our house for 265k.So annoying having to fork out 5k extra for the tax man isn't it?It is a rediculous system that needs reforming so that the extra is only paid on the difference ie 1% up to 250k and 3% on the 15k above the threshhold in our case.We just had to swallow hard and pay up!

michaels

In our area where 275k would be a natural price point it is actually pretty much impossible to sell a house between 250 and 300 - not surprising really. A typical example of the chancellor not understanding basic economics - after all it is not impossible to devise a system to collect the same revenue but do it fairly - what would people say if the same was true of income tax, one rate for people who earn up to 25k, another on all income for those who earn 25,001...

And the reason for this stupid tax (because why does it make sense to tax people who want to move house for example to a new job, it just encourages commuting) is that it does not show up in the Mr Average is £x better/worse off as a result of the budget headlines

John_M_Business

michaels wrote:

In our area where 275k would be a natural price point it is actually pretty much impossible to sell a house between 250 and 300 - not surprising really.

I don't think this is the case. Of course it would make a house between 250k and 260k more difficult, but it would make ones above that ever-so-slightly undervalued (i.e. by about 5k).

If a house was believed to be worth, say, 275k, then perhaps it would go for 270k instead.

kanjoose1

Offer £250k for the house and then maybe the vendor will have a dog or cat to sell you for £14k

Gambler

I have seen quite a few houses recently as "stamp duty paid" - how does that work?

Doozergirl

Gambler wrote:

I have seen quite a few houses recently as "stamp duty paid" - how does that work?

eg. You pay £264,000. The vendor pays the Stamp Duty of £7920 for you so he makes £256,080 on his house instead of you paying a total of £271,920. He does this as he mightn't get an offer over £250,000 otherwise.

michaels

John_M_Business wrote:

I don't think this is the case. Of course it would make a house between 250k and 260k more difficult, but it would make ones above that ever-so-slightly undervalued (i.e. by about 5k).

If a house was believed to be worth, say, 275k, then perhaps it would go for 270k instead.

But this does distort the market, the difference between a in your example a 260k (265-5) house and a 250k house is actually 15k, and the person moving out of the 260k house is 5k short of what they need to get the 325k house they are interested in...