Bidding at €317,500

Hi,
I'm looking at buying a 3 bed semi and most of the houses I'm interested in are going for around €310k to €325k.

I have noticed that a lot of houses have bids in at €317,500 but in some cases nobody bids higher because of the stamp duty implications.

I rang an estate agent earlier today to enquire about a very nice house for sale at €325k. The auctioneer said that there was a bid of €317500 on the house. The seller may hold out for more but then again they may accept that offer.

If I see a house that I like, would it be a good idea to try to get my offer in at €317,500 as early as possible because if nobody bids higher and I have the first bid in I will get the house?

Any advice greatly appreciated...

Hi

Having the first bid in doen't mean you have first refusal at that price. The vendor is within their rights to accept a latter bid of the same amount or even a lesser amount.

In most case, somebody that prices there property above the stamp duty thresehold are looking for more than the 317500. I would say that a property priced at 325k is really looking for 330-340k

been there done that, someone has always outbid us over the stamp duty! finally got somewhere but have to pay stamp duty

I'm not sure this is allowed (read: legal) but can you negotiate to buy some of the house contents (e.g. carpets, curtains etc) for cash between you and the seller while keeping the price for the physical house at €317,500?

It's a form of tax evasion, and as such exposes you to the proper sanctions. Not trying to seize the moral high ground, but...!

" I'm not sure this is allowed (read: legal) but can you negotiate to buy some of the house contents (e.g. carpets, curtains etc) for cash between you and the seller while keeping the price for the physical house at €317,500?"



There is a very good thread on this point on this site- use the search facility to search for "Stamp Duty - need to pass assets by delivery"


mf

Good link.....

Maybe all Dino can do is go, say, €1 above the other bidder. Yes, Dino will get hit by the stamp duty but if he really wants the house.......Also, if Dino believes house prices are set to continue this year it may be better for him to bite the bullet sooner rather than later.

The consensus on that thread seems also to be that this practice is fruitless at best, and more probably a form of tax evasion punishable by law. Which backs up my own understanding of the situation.

Of course it's up to Dino to decide on his/her best course of action, but please don't anyone recommend tax evasion here, or we'll have to close the discussion...

When buying or selling a house you should get and follow independent professional advice.

Most solicitors will advise on any potential liability with respect to Stamp Duty.

An accountant will advise on any other tax liabilities (CGT ect) you may encounter.

Note that the estate agent selling a property is neither independant nor the appropriate professional in this instance.

Thanks for the replies. I'm not planning on evading any taxes or doing dodgey dealings and I know a lot of auctioneers don't like the practice of selling furnishings seperately to dodge stamp duty.
My situation is that most of the houses in the area I'm looking are going for around the €317.5k. I have rang up to arrange to view a few different houses and in most cases the auctioneer tells me that there is a bid of €317.5k on the house. This means that if I want the house it will cost me a minimum of 4k more because of the extra stamp duty.
What i'm saying is that if I see a house that I like, I should try for an early viewing and get my offer in at €317.5k early. This way I have the first bid in and I have a better chance of getting it. This way I also save 4k. I have mortgage approval in place as well so there will be no delays in that department. The other tactic is to bid slightly over the €317.5k and take some of the first time buyers out of the equation.

Dino,

I think this is a good strategy. If the price is close enough to the stamp duty cut-off and you feel the house is worth the money then put your bid in fast. What happened to me once was that I put in my bid, someone bid higher but then backed out so they came back to me, but then I got cold feet.. I am now looking in the higher bracket, but the minute the 381,500 is reached I'm out of the game. so the minute it get's anywhere close to, go for it... And there's no use in going over the 317,500 to take others out. If you have mortgage approval you're basically the ideal customer as you can move immediately, that alone will give you a good chance. You should always stress that when putting in an offer. If there were two offers with 317,500 they'd always go for the one that is more likely to close the deal fast....Good luck.

dino said:

Thanks for the replies. I'm not planning on evading any taxes or doing dodgey dealings and I know a lot of auctioneers don't like the practice of selling furnishings seperately to dodge stamp duty.
My situation is that most of the houses in the area I'm looking are going for around the €317.5k. I have rang up to arrange to view a few different houses and in most cases the auctioneer tells me that there is a bid of €317.5k on the house. This means that if I want the house it will cost me a minimum of 4k more because of the extra stamp duty.
What i'm saying is that if I see a house that I like, I should try for an early viewing and get my offer in at €317.5k early. This way I have the first bid in and I have a better chance of getting it. This way I also save 4k. I have mortgage approval in place as well so there will be no delays in that department. The other tactic is to bid slightly over the €317.5k and take some of the first time buyers out of the equation.

Click to expand...

Why do u say 4k more. The stamp duty is charged on the whole price and not just on the amount over 317.5. also a house i viewed recently which was priced at 325 went for over 380

€317500 + 5% = €334211
€317501 + 6% = €337767

Stamp Duty Difference = €3556

I know it's not a fortune but it would probably furnish my sittingroom nicely.
I know there's a good chance that the property will go over €317,500 if it's a good one but there's no harm in trying....

Re: Bidding at €317,500

dino said:

The other tactic is to bid slightly over the €317.5k and take some of the first time buyers out of the equation.

Click to expand...

I think that it's not fair for the FTBs (but hey, who said that life has to be fair)
I do not know your current situation Dino, but it looks to me that nowadays people forget that they were FTB once, and how stressful buying a house it, especially now that prices seem to increase every second.

Dino,

Sorry got that wrong before!

I had an experience that may be of relevance to this posting.
Original House Asking Price = €320,000
My accepted offer price = €330,000
House price as written up by Estate Agent = €317,000
Contents as written up by Estate Agent = €13,000
As a first time buyer, under the Estate Agent's proposition, I would be paying €317,000 for the house and €13,000 for the contents, leaving a Stamp Duty of €0.
However, when I spoke to my solicitor she advised me against this.
Most contents are less than €3,000, and the most she'd seen was €7,000.
Contents of €13,000 would be very suspicous and would more than likely result in The Revenue asking for a valuation to be done on the contents, and the consequences if things didn't tally.
However, if I wanted to proceed, this is how things would pan-out:
Contents Price = €13,000
House Price = €317,000
Contract Price = €330,000
The stamp duty would be based on the "Contract Price" less the Contents Price:
3% of €330,000 - €13,000 = €9,510.

By fiddling the tax man I would have been liable to pay €9,510.
By doing everything above board I paid €9,900.
The saving of less than €400 would not be worth the risks.

As an alternative to the above, I suppose I could have paid €13,000 in cash, and bought the house for €317,000. Only a fool would hand over €13,000 with no gaurantee.

Personally, I think the stamp duty avoidance is a "sweetner" that some Estate Agents attract buyers. It's not until the ball has been rolling that the buyer discovers that this is a ploy and it's too much hassle to pull out.

One may instead of the contents of the house being "sold", a bank draft of the balance (more than 317k )made out to seller is held by the estate agent when deposit is handed over to them after the valuation is sucessfull. This draft is given to seller on them signing the contracts and closing the deal.

Would you want to take that chance

oh and the EA who explained this to me said "don't tell the solicitor!!!"

Its good to see actual cases of purchasers seeing how it works out in practice and seeing the down side of the old "under the table" payments. There are risks and there are penalties.

Its also worth mentioning that the lender needs to know that the mortgage is X percentage of the actual purchase price in the Contract so if you're getting a 90% mortgage then its 90% of the amount being paid for the house - not contents. Lenders want to avoid a situation where Revenue pull a dodgy transaction , send the deed off to the Valuation Office for valuing, it takes ages, borrower may face interest and penalties and deed and mortgage take for ever to be registered.

I know my clients are happy to save themselves a few bob and always think I'm just being really really mean when they come up with some clever little idea that involves me putting my neck on the line and I decline to have any part of it.

mf

But i am interested to know, if paid cash, how the revenue can pull a "dodgy deal" ?
I mean the buyer is taking the chance but the idea of a wad of cash or bank draft in the sellers name is so that you can't get caught.
I do see how, if i were in the same position you could apply for a 100% mortgage and then switch mortgages and get 92% value of house because suddenly it has "gone up" but that increase could be put down to market demand, inflation etc. Would this senario hold water if put to the test?