"Simon Finnigan" wrote
Do you think that they can't get their own valuation(s) done?
"Simon Finnigan" wrote
Do you think that they can't get their own valuation(s) done?
I responded to that question already but I would add this.
My guess is that you have been using informal 'market appraisal' valuations from estate agents. These tend to be on tghe high side. It might pay you to have a professional valuation done by someone from the RICS. You should expect to pay £100-200 for this. In my experience, these valuations tend to be significantly lower than estate agents informal 'market appraisals'. You should explain to the valuer that you are looking for a low figure or range of figures. Although this should not influence his result there is always a bit of leeway. You should keep report in case the tax people query the transaction later and the selle should keep a copy with his will so that his executors have access to it if needed.
Robert
Yes they can get their own valuations done, but it is a fairly random science isn`t it. For example, one agent said that if we wanted the house sold quickly, you`d have to start at 140k and get haggled down from there.
why would they?
yes but in that case they are looking for deals where some cash also changes hands, eg the real price is 150k, made up of 120k plus 30k cash. In this case, that wouldn't be happening, the real price is 120k, no cah chnages hands.
If I decide, completely altrustically,or perhaps stupidly (maybe I dont know what its 'really' worth) to sell my house for less than I could have got, there is no law to make me sell it at a higher price just so the government can get extra tax! I cant recall what the thresholds are, but there are lots of houses that go on at 1 below the threshold. Do you think the government investigate those to see if they "should" be advertised and sold at a higher price?
Maybe, but you can't very well value a house without seeing the state of the inside, and I don't think you have to let anyone into your house, even in this day and age, without some kind of warrant.
DSt.
Try telling that to the Council Tax Banding valuers!
"Simon Finnigan" wrote
Even (some way below) 140K is still liable to SD...
Because they are investigating tax evasion?
"Tumbleweed" wrote
But in this case, the extra 30K is a *gift* - as the sale is not one "at arm's length".
It's really the sale of a 150K house, 30K of which is gifted.
Tumbleweed wrote: > If I decide, completely altrustically,or perhaps stupidly (maybe I dont know
The salient point in this case is that the house is being sold to a family member; it is not being offered on the open market at that price. It is not an 'arms length' transaction.
Robert
Exactly.
Perhaps one way forward is for the current owner to actively market the property at, say, 125K. Then if there are no offers above 120K in the next (say) 6-12 months, they can go ahead as planned. But if anyone offers over 120K then they can't argue that 120K is a reasonable "open market price"!
To be fair, in a non-arm's-length deal, the gift is likely to be genuine[*]. There is no SD on gifts. You could gift the *whole* house and no SD would be payable, so why should SD be payable on part-shares? The transaction could be a gift of a 20% share of the house, coupled with a sale of 80% of it at full market value.
In such a situation there really ought to be no SD due. If instead a 30k cash gift (or indeed a gift of a voucher) *from seller to buyer* were involved, to be given back (by the buyer to the seller) together with 120k cash of the buyer's money to make up a 150k sale price, then SD would be payable on the whole 150k, and this would clearly be a silly way of proceeding.
But that's different. Council Tax is assessed on the ficticious value of the property *assuming* it to be in good structural and decorative order, and hence the "state of the inside" has no effect on the value used for banding. Stamp Duty, on the other hand, is based on the *actual* market value of the house, which clearly *is* influenced by the "state of the inside".
why would they think there was tax evasion?
this is all bollocks. Buy it for 120k. The chances of anyone questioning it are slim to none, if they did (whoever they is) then seller wanted a quick sale to someone he trusted, hence the lower price. As long as there is no lump of 30k going from one bank account to another they wouldn't have a leg to stand on trying to prove ...what? Just what would they prove? That someone sold a house for less than it was worth.......not a crime in this country yet.
Put it another way, say I sold a 950k house for 800k? Or a 300k house for
260k?Am I evading tax now? If so, then we are going to need some sort of big brother commission that values each house and penalises you for selling than less than their valuation! This is all getting very silly.
That could well be true as I know Rightmove has developed it's Automated Valuation Model (AVM)
Daytona
Further to this question, the price of 120,000 was actually agreed a year ago (it was being discussed at a family party :-) ). At the time the plan was to pay 100,000 for the house with 20k as a gift, but since then house prices have risen. Would the agreement to buy the house at a set price a year ago have any bearing on the matter? Witnesses can be supplied on request.
Thanks for your help.
I think you are fussing too much. Just buy it.
You'll probably get away with it, BUT have a look at the Inland Revenue website,
Distinction is made between "arms length" and family transactions.
If family they will definitely charge stamp and CGT(if appicable), on market value, if arms length then the price (consideration) applies.
Be aware that the solicitor may have to affirm the the transaction does not form part of a larger one, i.e. there's no money on the side.
My guess is that you'll escape, tho' guilty.
In other EU states the solicitors/notaries collect all the taxes stamp,CGT,IHT etc. They get hit v hard if caught ... struck off maybe. No waiting for the next Jan but one has to pay up, front buyer and seller, not next Jan+1 like sellers in UK in our very low tax regime.
So, as I say - go for it , we are so undertaxed and policed that you've every chance of stealing the Stamp Duty owing, Me
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