Paid deposit at auction NAMA

Niamhie

Registered User
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7
hi everyone, my family and friends and I got together, and paid a deposit to NAMA in an auction for 6 houses! We did everything right (or so we thought) we spoke to our solicitor, our accountant and the estate agent acting for NAMA and they all assured us there would be no claw back on tax or anything!
The houses were originally built as holiday homes alongside a hotel! The hotel is closed now and the majority of the houses are now in NAMA there is certainly no business there now! As the houses were originally intended to be as part of a business it turns out there were special conditions outside of the original contract! The solicitor has had the contracts a number of weeks and this has only come to light now! We are now liable for 13.5% VAT on the purchase price of the house.

I guess what I'm asking is, is there a) anyway around this VAT malarkey or b) anyway to get the deposit back?
 

Dermot

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1,054
As the houses were originally intended to be as part of a business it turns out there were special conditions outside of the original contract![/QUOTE


Were these special conditions in relation to the VAT available to you/accountant or solicitor or did you check prior to the auction about the Vat situation
 

Niamhie

Registered User
Messages
7
The contract wasn't available for viewing until after the auction! We requested it from the auctioneer before numerous times! So we tried to think of every single issue that could come up (tax, got engineers reports, independent valuations etc)! The contract was there then to be singed but it was at half 4 on a Friday evening and they were hunting us out of the office!
We have never heard of VAT being paid on a house! We don't even understand why VAT is payable on it!
 

Dermot

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1,054
If it was a condition in the contract or an addendum to a contract that they were subject to a Vat they would be able to enforce it. There is Vat on new houses but in normal circumstances it is included in the selling price and the developer pays it over to Revenue.
I would get your solicitors to dig their heels in and fight them on it. I am aware of this happening before where receivers are involved and I have seen it go through without paying Vat on top of what the purchaser thought was the buying price.
I am absolutely no expert legally on this matter but just stating what I have seen going on.
BTW if you succeed in securing the properties without paying the further 13.5% Vat do not forget that you do not have to pay stamp duty on the Vat part of the price.
If the other side agree to accept your price that will still mean that they sellers have to pay the appropriate vat out of what you bid at auction
 

Niamhie

Registered User
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7
Thank you so much for taking the time to reply!
The houses are ten years old at this stage, some were rented at times others haven't at all! But essentially they were all built for the intention of being a business - am I right in thinking this is why they are suggesting we are liable for VAT.
It disturbs me greatly that a government body acting on behalf of the tax payer can have no problem selling properties with conditions like this on it!

If they refuse to allow us to not pay the VAT is there anyway we could get the deposit back? It's €25k
 

Bronte

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13,864
The contract wasn't available for viewing until after the auction! We requested it from the auctioneer before numerous times! So we tried to think of every single issue that could come up (tax, got engineers reports, independent valuations etc)! The contract was there then to be singed but it was at half 4 on a Friday evening and they were hunting us out of the office!
We have never heard of VAT being paid on a house! We don't even understand why VAT is payable on it!
Well your solicitor should have advised you on this. I don't see how you can get out of the contract as the auction is based on you buying as is when the gravel falls. In other words it's up to you to make sure everything is ok legally beforehand before you bid. The reasons most properties go to auction is because of dodgy legal issues or where they are trying to pull a fast one.

What has your solicitor advised you. I'd be amazed if you get your deposit back. I presume this was handed over on auction day.
 

mf1

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4,352
"It disturbs me greatly that a government body acting on behalf of the tax payer can have no problem selling properties with conditions like this on it!"

If you were registered for VAT, it would be no issue.

"The contract wasn't available for viewing until after the auction!"

And you went ahead and bought anyway?

This transaction has VAT written all over it.

Either you did not get proper advice, in which case you are stuck with it or you did get proper advice and you have a serious claim, in negligence, against your solicitor/accountant.

mf
 

Niamhie

Registered User
Messages
7
"It disturbs me greatly that a government body acting on behalf of the tax payer can have no problem selling properties with conditions like this on it!"

If you were registered for VAT, it would be no issue.

"The contract wasn't available for viewing until after the auction!"

And you went ahead and bought anyway?

This transaction has VAT written all over it.

Either you did not get proper advice, in which case you are stuck with it or you did get proper advice and you have a serious claim, in negligence, against your solicitor/accountant.

mf
I thought the same too! My Dad spoke with the accountant and the solicitor many times before hand! Got them to dig deep (properties are local and well known), ensure there were no tax implications etc! my thought is any solicitor/accountant of any use should have spotted this VAT issue! I found after a quick google that houses built as a business would always incur VAT! This is the first house I've ever bought, I'm scared to death that I'm either losing my deposit or else have to find another €6k for the VAT!

If we do pay the €6k vat when we sell the house on will the same issue arise?
If never sold, or occupied, then may be classified as still new.
Two of the houses had tenants living in them when we bought and the other houses have evidence that people have lived in them at some stage!
 

Palerider

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1,495
I saw this elsewhere with an Allsop auction of three adjoining houses ideal for rental, the legal pack outlined that vat was payable on top of the hammer, your legal pack should also have included that information.
 

Bronte

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13,864
Is that all you've to pay extra 6K. So the house is only costing you about 50K. What were you hoping to furnish it with? Do you have any money set aside. Can you get a credit union loan ?
 

Clonback

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349
In 1998 I purchased a holiday home which was rented for a few years and ended up paying Vat .Firstly I registered for Vat and claimed it back and later deregistered which was based on advice from SKC now KPMG.
Let's us know how you get on.
 

Niamhie

Registered User
Messages
7
Is that all you've to pay extra 6K. So the house is only costing you about 50K. What were you hoping to furnish it with? Do you have any money set aside. Can you get a credit union loan ?
I'm 25 years old I am buying with a combination of a mortgage and a CU loan (only got granted 60% of the mortgage as I am not in full time employment - I work 3 days a week guaranteed and the other 2 I only get some weeks) so another loan isn't an option and I can't imagine the bank will increase the mortgage.
The houses are furnished and I have stamp duty/solicitor fees etc set aside. €6k is a lot to some people I'm sorry to say I am one of those people.
 

Bronte

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13,864
No I was going to move into it for the time being but if I don't pay it now it will be due when it comes to selling it!
Yes I can well see how this extra amount is a killer at such a young age and on only a 3 day week so apologies for suggesting otherwise. Would the credit union give it to you if you ask them? Are they giving you 40%. Around 20K?

I'm amazed the CU is lending for house purchase. Back in my day though everybody was at that and many of us didn't tell them what the money was for.

If the purchase price is higher then the bank may give you more. 60% of the extra 6K is around €3600.

In total, between the bank and the CU are you borrowing 100%?
 
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