Avoidance of Stamp Duty query

Hi, I have searched the forums and could not find the info I was after so apologies if something similar has been asked before.

I am hoping to purchase a house soon that is on the market for 289K.
I'm likely to secure with an offer of 260K. I know the 3% threshold is at 250K but I know they wouldnt accept an offer this low.

To avoid the stamp duty hike, I was hoping to pay a combination of 250K for the house and 10K fixtures and fittings (the fixtures and fittings would have been included anyway such as carpets, not as extras). However, I'm aware that 10K fixtures and fittings is a very large sum to declare just for carpets, curtains etc in a typical 4 bed house and would probably be scrutinised by the taxman and treated as tax evasion.

However my question is this.

If the vendors estate agent amended the particulars of the property in question, and took off things like "fitted kitchen" or "built in dishwasher", technically speaking you wouldn't be buying these as part of the house sale in the first place. Could these then be added to the separate 10K fixtures and fittings inventory to legally justify the 10K value?

I hope you follow. Thanks in advance for your advice.

I don't expect you'll get much support for a proposed tax-fiddle here.

I dont see it as a tax-fiddle, I wouldnt want to do anything illegal.

Tax avoidance is ok, tax evasion is not.

I don't see it at fiddling but basic tax planning which any tax payer had the right to do once within the law.

Fixtures and fittings can pass by delivery i.e. they are not included in any written contract or agreement. You do have do consider the fact that you are dealing with a 3rd party in this case and would therefore, be relying on them to keep their side to pass all that you have discussed.

This will mean the stamp duty is payable on the amount for the sale of the property itself.

However, as they are a serier of transactions the rate of stamp duty applicable to the conveyance of the property will be that based on the value of the property and F&F.

Ask your solicitor about it and they will confirm.

Hope that makes sense!

Thanks for the advice BaileyMC, it is appreciated.

However I am left puzzled as to whether or not you think my proposal would work.

Could you clarify if at all possible?

Your advice is encouraging though and I will definitly discuss with my solictior.

Stamp duty for a non-first time buyer is now calculated by subtracting the first 125k and then the balance at 7%.

This splitting of house and contents is still relevant in so far as the contents are not stampable as long as the value of same is real.

Hi,

Yes I believe that your proposal would be correct (I'm purposely not using the word work as that does make it sound like something dodgy and it really isn't).

The key point would be that the contract for the sale of the house is for the correct value and not undervalued.

You would have to be able (as would the vendor) to stand up in a court of law and defend the €10k valuation for the fixtures and fittings. This would include anything that can be taken out of the house i.e. everything other than the bricks, ceilings etc. (electrical appliances, bathrooms suites, fitted warddrobes, light fittings, timber garden shed would all be fixtures and fittings)

While it will give a saving on the stamp duty, it will be less than what you had thought originally. As I said previously it will only reduce the amount that is stampable (value of the house). The rate will be determined by the total value of the proceeds payable for the house plus the fixtures and fittings.

I don't know if that makes better sense! Definately talk to your solicitor (s)he will know for definate.

Since last year's budget there is no longer a 250K threshold.
Stamp duty is charged as follows:
Up to €125,000 Exempt
Next €875,000 7%
Balance 9%

As far as I know that was a common fiddle in the boom times. I think Revenue are on to it and in the current times of much reduced SD receipts it is more likely to be scrutinized by them.

Not that it matters because as helpful mate pointed out you are basing it on out of date information. The only thing to add is that first time buyers are exempt from SD on purchase of second hand homes (in case you are a FTB).

the thresholds used by the op are out of date.

On your "tax planning", This was something that was dealt with by Revenue a long time ago. Even though the contents can pass by delivery, they are counted in determining the threshold that applies i.e. even though you dont pay stamp duty per se on the 10k fittings, if the inclusion of the 10k in the sale price would bring the proceeds into higher stamp duty band, that band will apply

There is no way of avoiding this as when a document is stamped you must state whether the transaction is part of a larger transaction i.e. you may be buying the house (but its part of a larger transaction involving the house and its contents!)

qwerty08 said:

............. Even though the contents can pass by delivery, they are counted in determining the threshold that applies i.e. even though you dont pay stamp duty per se on the 10k fittings, if the inclusion of the 10k in the sale price would bring the proceeds into higher stamp duty band, that band will apply

There is no way of avoiding this as when a document is stamped you must state whether the transaction is part of a larger transaction i.e. you may be buying the house (but its part of a larger transaction involving the house and its contents!)

Click to expand...

Personal experience of this. The stamp duty figure is based on the transactional value of the purchased house - house price plus contents. I checked this with revenue and my own solicitor and this is a fact. Pushed me into a higher stamp duty rate at the time.