Stamp duty query
Discussion
Mrs AC has put an offer on a flat at just below the 3% threshold which she thinks will be a good investment. The vendor has already found a new property but needs £265k for her flat to be able to make the cost to change payment.
From past property purchases I've established that solicitors don't like to deal with exchanges that have more than £2k for furnishings and fittings unless a very detailed inventory has been drawn up (to take that figure to around £5k). Another trick is to pay the vendor's agency fees which also help bump up the bid without reaching the threshold.
Does anyone know of any other tricks that can be used to keep the purchase price below £250k?
From past property purchases I've established that solicitors don't like to deal with exchanges that have more than £2k for furnishings and fittings unless a very detailed inventory has been drawn up (to take that figure to around £5k). Another trick is to pay the vendor's agency fees which also help bump up the bid without reaching the threshold.
Does anyone know of any other tricks that can be used to keep the purchase price below £250k?
vixpy1 said:
So, the flat was under 250K.. and now the vendor wants 265K?
no, vendor wants £265k but the offer was just under £250k.
My gut feeling is that she'll agree at £260k but the extra 10k will push the purchase prive over the 3% threshold.
What I need to do is work out a way of meeting that price but keeping the pruchase price below £250k.
A property is only worth what somebody is willing to pay for it. Inflating the asking price in order to fund your move is a classic pitfall that leads to an unsold property languishing on the market. In reality, anything priced at £250,000.00 to about the £265/270k mark is never going to sell for a penny more than £249,999.99
House prices are generally steadying if not falling in most areas, so a £15k hike (plus the extra £5.5k stamp duty the buyer will have to fork out) is taking the p155.
My advice would be to stick to the offer already made, with maybe a few £k for chattels (the vendor needs to be careful, though, as the IR are cracking down on "tax evasion" by this route, so they'll need to be able to justify the figure) and suggest that the vendor negotiates a bit harder on their onward purchase. Assuming the vendor is trading up, £15k at the £250k level is a harder pill to swallow than £15k at a higher level, so they ought to be able to do a deal. If not, tough!
House prices are generally steadying if not falling in most areas, so a £15k hike (plus the extra £5.5k stamp duty the buyer will have to fork out) is taking the p155.
My advice would be to stick to the offer already made, with maybe a few £k for chattels (the vendor needs to be careful, though, as the IR are cracking down on "tax evasion" by this route, so they'll need to be able to justify the figure) and suggest that the vendor negotiates a bit harder on their onward purchase. Assuming the vendor is trading up, £15k at the £250k level is a harder pill to swallow than £15k at a higher level, so they ought to be able to do a deal. If not, tough!
sixpot said:
Simply, once sale has gone through, hand over a cheque for £10k....been done loads of times and if they're the supicious type, just get your solicitors to draw up a contract......call it retention amount or something.
I think you'll find that the solicitors would be duty bound to report the offence of tax evasion.
sixpot said:
Simply, once sale has gone through, hand over a cheque for £10k....been done loads of times and if they're the supicious type, just get your solicitors to draw up a contract......call it retention amount or something.
I think you'll find that the Revenue will be onto that one "like a rat up a drain pipe". Also, remember the lawyers are legally bound to report any suspected tax evasion.
I would rather be buying than selling at the moment, I would offer the £250k on paper plus the bits and pieces mentioned and say take it or leave it.
As I am not related to God in any way I do not know what will happen with the property market in the short term but if I were guessing I would say it will drop.
Bearing in mind you can get 5.50% for just having money sitting in the bank not sure how good an investment property is in the short term.
As I am not related to God in any way I do not know what will happen with the property market in the short term but if I were guessing I would say it will drop.
Bearing in mind you can get 5.50% for just having money sitting in the bank not sure how good an investment property is in the short term.
pdV6 said:exactly. Having introduced these money-grabbing new stamp duty rates and thresholds, the government realised that people would do their best to avoid crossing thresholds and so they change stamp duty on land form being a duty that was in theory voluntary (i.e. there was no obligation to pay it, but an unstamped document of title cannot be used to evidence title in court, thus making the propery as good as worthless) to a tax failure to pay which is a criminal offence. It is now called Stamp Duty Land Tax.
Simply, once sale has gone through, hand over a cheque for £10k....been done loads of times and if they're the supicious type, just get your solicitors to draw up a contract......call it retention amount or something.
I think you'll find that the solicitors would be duty bound to report the offence of tax evasion.
Ribol said:
I would rather be buying than selling at the moment, I would offer the £250k on paper plus the bits and pieces mentioned and say take it or leave it.
As I am not related to God in any way I do not know what will happen with the property market in the short term but if I were guessing I would say it will drop.
Bearing in mind you can get 5.50% for just having money sitting in the bank not sure how good an investment property is in the short term.
Agreed, but Portman are offering her a 4.49% loan which I feel would be a wiser move than investing in Pucci, Jimmy Choo and Cocinelle
Zod said:
It is now called Stamp Duty Land Tax.
Deals of this nature will continue, but will be completely off the radar - nobody to know about them but the 2 parties involved.
Even then, the IR is extremely suspicious of transactions at or very near SDLT rate-change boundaries and has a small army of drones checking them out all the time. The district valuer can also be called in to give an opinion on the value of a property and they could still charge you tax on this amount rather than the actual sale price!
What they should have done was kill the problem once and for all by charging the higher %-ages only on the balance rather than the whole amount. Its not like the government would actually be losing out on anything, as a few years ago property prices were nowhere near current levels, so less Stamp Duty was collected anyway.
IIRC SD was introduced in the days when £60k was a serious amount of money to spend on a house and successive governments have treated it as a cash cow rather than revising the bands upwards in line with either inflation or property prices.
JonRB said:
What they should have done was kill the problem once and for all by charging the higher %-ages only on the balance rather than the whole amount.
Absolutely. It works for Income tax, so why not Stamp Duty?
It still hurts on income tax, but at least it doesn't dance on your grave and p155 on your headstone!Why not get the vendor to buy a very cheap car with a scrap of MOT and tax on it. Then Mrs AC buys it from the vendor for 10 grand plus a bit and immediately scraps it.
Result. House sold below stamp duty threshold, and vendor gets the amount they want. All legal and above board surely?
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