Minimising Stamp-Duty on a Property Sale

Quick Q please : If theoretically, I want to offer £260,000 for a property, would it be possible to draw up a contract to purchase the Freehold for £249,999 and to offer to buy the (free-standing) Garage at the end of the garden (or something else on the premises) for £10,001 - hence paying Stamp Duty at 1% on the larger sum, rather than

3% on the entire £260k?? I suppose that this might also depend on whether the garage (or alternative item) was mentioned on the original Sale Particulars too??

Or can the IR get petty over such matters?!

Anyone aware of any useful resources for further ideas around Stamp Duty 'creativity'??

TIA, Mark

Reply to
Mark Hildyard
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Why bother - offer 245,000 plus 15,000 for fixtures and fittings. Be up front about it.

Reply to
Em

"Mark Hildyard" wrote

Get "petty" over tax evasion of over 5,300?? What do you think?

Eg - what do you think the IR would do if they found a HRTP "hiding" 13,250 of income, so as not to have to pay an additional 5,300 (40%) income tax?

Reply to
Tim

"Mark Hildyard" wrote

I can't see why not. You would, of course, still need to pay Stamp Duty on the full 260,000 (ie at 3%).

"Mark Hildyard" wrote

Aha! Don't forget that the wording is usually "this transaction does not form part of a series of transactions of total amount exceeding 250,000".

Presumably you could buy either the house *or* the garage initially, then after a suitable time period, buy the other. But if the original contract is for the sale/purchase of *both* (even if one is delayed), I strongly suspect that they would be classed as "a series of transactions"...

"Mark Hildyard" wrote

I can't see that being a factor - surely it depends on what the sale

*contract* says, not any pre-sale advertising?!
Reply to
Tim

"Em" wrote

... and you think that won't be classed as all part of the same transaction??

Reply to
Tim

It worked for, ahem, somebody I know a few years back.

Reply to
Blackthorn

Blackthorn responded in news:blp2vr$eph6r$1@ID-

202064.news.uni-berlin.de like this:

Me too...

Reply to
Fred Bloggs

The dodge has been standard practice for the best part of 30 years.

I have never seen anything to suggest that it isn't perfectly legal as long as the 'other' items are actually worth something close to the amout that they are being sold for

Tim

Reply to
tim

Do you have a specific reason for saying this other than your apparent, incorrect view, that such a split purchas does not work in principle (as a Stamp Duty saving method).

It could be that garages/gardens are treated differently to other items, but I see no reason why the OP shouldn't make an offer for the house without the garage and then transact a completely separate deal for the garage, separate garages are bought and sold, on their own, all the time. There will be extra legal work required but it will be a fraction of the tax saved.

Tim

Reply to
tim

If someone came to me offering a dodgy deal as inferred I would tell them to go away as I would not trust them.

Reply to
Tom

So what? Fixtures and fittings are not subject to stamp duty. It would be dodgy buying the garage and house separately, I think, but fixtures and fittings are often used in this way to push the price below a SD price break. It might be a problem valuing them as much as £15k, though, if in fact they are worth nearer £2k.

Reply to
Ronald Raygun

snip

Correct, so this is where the IR would nail you.

OTOH fixtures and fittings (carpets and drapes) are often offered separately, especially in flats. In theory you could take them away (and so could te vendor), so they are not part of a single transaction.

So 250k for the house and 10k for the bits and pieces.

All these wangles fall into the same trap.

Reply to
R. Mark Clayton

In message , tim writes

That might complicate the mortgage side of things, depending on the actual circs of course.

Reply to
john boyle

In article , Mark Hildyard writes

Like all tax issues, it is for you/your solicitor to declare correctly. If you or the transaction are subsequently chosen for investigation, you risk the various penalties so,.... I am presuming that you are looking for a legal way of avoiding the stamp duty.

The garage issue doesnt work. It is clearly part of a larger transaction, whatever the particulars state. In any event, the vendor has to sign the transfer which states that it is not part of a larger transaction, and why should they risk becoming part of a fraud. I suppose if you bought the garage a few years later, it might be OK.

Furniture, carpets, and other things not "part of the house" would count, but you must be sure that you can justify the value placed on them - not forgetting that they are second hand.

I dont know for sure but, if I was the Inland Revenue, the transactions I would select for inspection would be those close to the Stamp Duty bands.

Reply to
Richard Faulkner

Yes. Legal of course, why else would I post under my own name? :-)

All further advice gratefully received. Am just a weeny bit shy at paying an additional *c.£5300* tax 'just' for paying an additional £10001 for a property! (ie. £260K as opposed to £249,999...)

I doubt I can stretch fittings to £10K :-(

WTF is the 3% band set here anyhow? (£250k) - it's not as if this is an expensive house for the SE England in 2003?!

Mark

Reply to
Mark Hildyard

In article , Mark Hildyard writes

Unfortunately, life's a bitch, and then you die

IIRC the New Labour Chancellor decided on this

You could, of course, try to negotiate the price down to £250,000, (I think the tax applies "over" £250K. I obviously dont know the house or the market.

One though which crosses my mind.....

I wonder how it would be treated if you asked the agent if they would invoice you their fee, rather than the seller. You could also pay the sellers legal fees? Add in a bit for carpets, curtains, garden swing, lawnmower, furniture they dont want etc.

Reply to
Richard Faulkner

Are you kidding?

Even in SE England I would expect a house this price to be 200sqm+.

We recently fitted carpet in the common parts of our flats and the carpet was pushing 25psqm plus fitting - so that's 5k for a start. Chuck in some curtains (kkk), new lawnmower and an antique desk and hey 10k easy.

Option two offer them 254,700, stating that your budget is 260k and you can't raise any more money, or alternatively they can have their 260k, but they pay the duty...

Reply to
R. Mark Clayton

In message , R. Mark Clayton writes

Assuming that the vendor is happy to obtain 260k but accept the duty then that means they will end up with 252200.

But if the purchaser offers 254700 then they will end up paying 262341, so perhaps the compromise is to offer somewhere between 252.2 and 254.7 and the purchaser pay the duty.

Reply to
john boyle

Heh! In past 5 months of perusing the particulars hereabouts (Sussex, Hants, Surrey), I have *never* seen anything remotely approaching

200sqm (and in any sort of even semi-desirable location) under c.£400K!

Do pray tell where these cheap-yet-capacious residences may be found, please :-)

Even the newish 5-bed-detached-double-garaged-twin-baths-with-study (and postage stamp garden!) rarely exceed 150sqm internally, in my experience...

Good ideas though - TVM.

Mark

Reply to
Mark Hildyard

"john boyle" wrote

The purchaser appears happy enough to pay 1% x 250K (2.5K), just doesn't want to pay 3% x 260K (7.8K), for stampy duty [difference 5.3K]. I wonder if they would be happy enough to pay 1% x 260K?

Purchaser also seems happy enough to pay 260K for house - ie just doesn't want to pay the higher-rate stamp duty. Which means he might be happy enough to pay 260K + 2.6K = 262.6K for house+duty (?). If so, price could be set at 254,951 (with purchaser paying duty of 7,649 at 3%) ...

Reply to
Tim

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