House sale pricing

[Jukie]

Hypothetical situation:

I arrange the private sale of a house, ie no agent involved. The property is valued at £170k.

Can the vendor and I legally agree that the offical purchase price is say £120k, thus avoiding stamp duty and I pay the differential of £50k "behind the scenes"?

TIA, David

 

[pammy]

No.

It is illegal to try and affect the price of the house to avoid paying stamp duty.

 

[Ashley]

I have not done a private transfer for sometime but in the commercial world you pay duty at the market valuation not sale price.

Plus 50k a lot of money to lose (i.e spend without tax man knowing) on your side, and have laying around in a suit case until you spend it with no signs of assets (I not saying it can not be done, just hard for us on limited budgets). Hope that helps Lester

 

[abbos]

The stamp duty price changes over £150k, so for example the house could be sold privately for £149,999 and the remaining balance could be paid for "fixtures and fittings" although I would very strongly advise that you go via a solicitor to ensure that these ammounts are paid as agreed.

Seen this done many times.

Good luck.

 

[pammy]

The stamp duty price changes over £150k, so for example the house could be sold privately for £149,999 and the remaining balance could be paid for "fixtures and fittings" although I would very strongly advise that you go via a solicitor to ensure that these ammounts are paid as agreed.

Seen this done many times.

Good luck.

They'd have to be some fixtures and fittings to be valued at £20k on a house sale. If the amount is there or thereabouts it can be done - but you won't get a solicitor to bend the rules! You'd only likely succeed if there was no mortgage purely a cash sale.

 

[Ashley]

Yes, even if you could how could the average family hide 50k cash or explain the assets/cash if introduced in a traditional fashion I.E car, banking, shares etc as all these things require that the vendor will have address linked invoices.

 

[Swiss Toni]

It is a criminal offence for all parties involved - inc the Solicitor.

And a transaction that will trigger banks money laundering checks.

AND not an enforceable debt if it is unlawful (so one party takes a big risk..).

You could try it, but asking whether it is a good idea on a public internet forum suggests you are doomed to failure from the start...

 

[SimonsMerc]

If you are a private individual, then yes, you could do this. If you both agree on a price of just under £150000 for the house, and you sell it for that price, you will not pay stamp duty on the house - people do this all the time (you never see a house for £155k or £260k, because they just won't sell at that tiny bit over the limit).

The remaining 20K could be paid out of band, in such a way that no-one realises. There are many ways to do this. Remember that as a private individual (not a company) there are no laws requiring to you keep accounts. There are many creative ways that one person can give another person twenty thousand pounds. They could buy you a car, for instance, or just give you a wad of cash which is paid in to a bank account over a number of months. The important thing is that they are giving you the money as a gift, rather than anything to do with the house sale. It's perhaps "dodgy", and I probably wouldn't do it myself, but I see no reason why you couldn't do it.

The thing is, first of all do you trust the person to give you the 20k? Really? Absolutely?

No, I mean really? That's 20k that they can just take, walk off into the sunset and you will have absolutely no recourse in law. None whatsoever. They can pay you £149999.00, take the house and vanish.

Don't think I would do it, personally - there are exactly three people in the world that I trust to that degree and none of them want to buy my house ;-)

-simon

PS. Oh yeah, and what Swiss Tony said - since you started by asking on a public internet forum then this probably isn't for you

 

[Swiss Toni]

Money laundering regulations require that if a solicitor or estate agent even suspect this is being done, they report it (and don't tell you that they have done so) - banks do this all the time. If they fail to do it or if they tell you they have done it, they leave themselves liable to criminal prosecution.

 

[Ashley]

IMO the only ones who can do this are people who already use a cash life, this is the reason a lot of self employed people pay themselves cash only (though the books but in notes I know of a lot who pay them selves 50/50 cash/bank though the books) that way when they have opportunities they can explain it by piling away cash (not saying I agree with it, but this is how it is done). I would also be worried that at some point the buyer would explain the transaction to their accountant (they may not have one today but you never know whats round the corner), family or worse case IR.

 

[janner]

The deal is only possible if..

a) It takes place in Russia.

or

b) You want to share a cell with a man they call 'Big Leeroy'.

 

[fuzzer]

janner is right .. they will get you in the end.....

 

[SilverSaloon]

Hypothetical situation:

I arrange the private sale of a house, ie no agent involved. The property is valued at £170k.

Can the vendor and I legally agree that the offical purchase price is say £120k, thus avoiding stamp duty and I pay the differential of £50k "behind the scenes"?

TIA, David

it would be fraud....

unfortuatly!!!

 

[jaymanek]

If you are a private individual, then yes, you could do this. If you both agree on a price of just under £150000 for the house, and you sell it for that price, you will not pay stamp duty on the house - people do this all the time (you never see a house for £155k or £260k, because they just won't sell at that tiny bit over the limit).

The remaining 20K could be paid out of band, in such a way that no-one realises. There are many ways to do this. Remember that as a private individual (not a company) there are no laws requiring to you keep accounts. There are many creative ways that one person can give another person twenty thousand pounds. They could buy you a car, for instance, or just give you a wad of cash which is paid in to a bank account over a number of months. The important thing is that they are giving you the money as a gift, rather than anything to do with the house sale. It's perhaps "dodgy", and I probably wouldn't do it myself, but I see no reason why you couldn't do it.

The thing is, first of all do you trust the person to give you the 20k? Really? Absolutely?

No, I mean really? That's 20k that they can just take, walk off into the sunset and you will have absolutely no recourse in law. None whatsoever. They can pay you £149999.00, take the house and vanish.

Don't think I would do it, personally - there are exactly three people in the world that I trust to that degree and none of them want to buy my house ;-)

-simon

PS. Oh yeah, and what Swiss Tony said - since you started by asking on a public internet forum then this probably isn't for you

This happens every day all over the country, I know of people who make succesful careers out of altering and playing with property valuations... I also know for a fact that britains biggest home builder (wont name) will happily put down whatever value you want, as long as you buy a couple of plots from them...

So follow the advise above, but YES completely possible..

 

[nickg]

you would be causing yourself an enormous amount of aggro for the sake of saving a few grand. Not trying to downplay the importance of this kind of sum, but not worth going up against the inland revenue for that kind of money...................

 

[Steve Chafer]

House Pricing

Get a good solicitor , a very good one and consult an accountant

Sell in the most effective but legal way, pay the taxes and sleep easy -Anything else and it'll be worry, worry, stress and worry.

Steve

 

[Chris_J]

The stamp duty price changes over £150k, so for example the house could be sold privately for £149,999 and the remaining balance could be paid for "fixtures and fittings" although I would very strongly advise that you go via a solicitor to ensure that these ammounts are paid as agreed.

Seen this done many times.

Good luck.

Can I ask a really stupid question here? How does the Stamp Duty price change over £150k? I know it's 3% or something like that at £250k.

 

[jdrrco]

A little late coming to the party, but as an estate agent with 22 years experience...

1. There is no change in the stamp duty rate at £150,000. Up to £124,999 no stamp duty is payable. For sales between £125,000 and £249,999, stamp duty is 1% of the purchase price, between £250,000 and £499,999 it is 3% and over £500,000 it is 4%.

2. Your solicitor has to sign a document stating that there are no related transactions, so you cannot claim that fixtures and fittings are a separate deal at £50k (or even £1k)!

3. What you are proposing will save your buyer £1700. It will save you nothing.

4. You would run the risk of

a. the buyer not paying the extra £50k

b. you having no recourse to get the £50k, as you must not have told your solicitor, accountant etc or they would be duty bound (under the Money Laundering Regulations) to "shop" you. You would also, by definition, have no contract with the buyer for the extra £50k.

c. being done for fraud - which is what it is. The Land Registry logs the prices of all transactions across the country and these records are then published each month. The unreasonably low price of your transaction would be visible on loads of websites for anyone to look at for years to come and the chances of it not being picked up by someone over the following six years (the time limit I believe for tax matters) are extremely slim.

​

Do you really think it is worth the sleepless nights for the next six years to save somebody else £1700?

Whatever people's preconceptions about our industry, most estate agents are honest (although I accept there are a large number who are incompetent). If any agent has even suggested trying to get round stamp duty, show him/her the door and go to someone else.