Hi All,
Just wanted to see if anyone is aware of this or if it is possible? I am in a situation where I have found a new house I would like to buy and am thinking about putting my current place on the market. This got me thinking that my current place seems to be rising quite well and might be worth keeping long term and renting out. I have a decent amount of equity in the house and although I know I will get taxed to death (maybe some clever member walk me through the implications of that as it is new to me?) but as long as it pays for itself and I can get some money out of it I don't mind.
Anyway....... his has all got me thinking that it might be worth keeping my current place and buying the new place, not outright but I can afford to put a deposit down. The only thing that sticks in my throats is paying yet another lot of stamp duty (only bought my current place a year ago) and it will be at the higher rate because the lovely government has seen fit to kick people in the balls just a little bit. I have had a off the record chat with the agent for the buyer who says the seller is motivated to sell and may open to the idea of agreeing a price for his house and 'refunding/paying' the stamp duty but I don't know if it is possible, legal, how I would get the money back etc etc
Any thoughts gratefully received!
Cheers!
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I expect the EA means the vendor will "pay" your stamp duty by reducing the purchase price appropriately.
I think you have 2 years to sell your old house and then you can have a refund on the extra stamp duty paid on a 2nd property, after that it becomes an investment property and you will also lose your CGT exemption.
Your are right BTL is not easy these days...
How would capital gains work in this situation? If you move in the new house and decide to sell your existing some time in the future presumably it would be a 2nd property. Not sure if you'd payCG from now or when you bought it.
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Basically time apportion the gain over the period of ownership so you still get relief for owner occupation. There are various reliefs too including lettings relief:Originally Posted by Rodder
https://www.gov.uk/government/public...relief-2017--2
No one got any views? Doesn't seem like it's that unusual a thought?
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Already answered - the buyer reduces the price by the amount of the SD
Whatever you choose to call it, you are basically just asking for a discount, (either opportunistically or through necessity) on the price to cover the stamp duty and the seller will either say yes or 'F R O' depending how minded he is to sell to you. The price satisfaction equilibrium between buyer and seller has to be reached before a sale can progress, whether the requested discount is for stamp duty or extra funds to buy shiny things is neither here nor there.
Last edited by KavKav; 16th August 2017 at 09:25.
another issue is that if it a discount then the valuer for any bank will reduce the valuation and therefore amount that can be borrowed gets reduced
suspect the OP may be wishing to avoid that situation, but if it is dressed up as a post-completion refund that will still be disclosable to the lender
By reducing the sale price there will be less stamp duty to pay so I would expect the vendor will rather go the other way.
used to happen round here a lot - and not sure if legal or not (probably not) but the price you paid was always £1 below the stamp duty threshold and then you paid the difference up to the real price for "fixtures and fittings" things like parking space
all very messy and of course you could only get the mortgage up to the ceiling price as thats what it was being sold for - then if your deposit covered the rest great otherwise you had to get a bridging loan which is some cases would be more in the long run in interest than the stamp duty
They clamped down on this in UK many years ago as the "fixtures and fittings" used to get more and more optimistic valuations when they had the big stamp increases at 250 & 500 (when these numbers bought you a decent house !)
Entirely legal, just needs both solicitors to be aware and to effect it. Very common on new builds where builders need their shareholders (and prospective buyers) to see the price of each unit sold on a development to rise time after time, so they don't like reducing headline prices, but use this in their box of tricks to incentivise someone to pay that fee (so fixtures/ fittings being included etc is one thing they can offer to make a sale happen, as is this).
In practice, the buyer's solicitor withholds the amount of stamp duty due, even though that means the total passed over does not match the purchase price. The seller agrees with their solicitor that it is acceptable as they have in effect, foregone the money that would be needed to pay stamp.
The buyer's sol then pays the stamp, as they are obliged to do so, with funds on account, rather than risk the seller either not ponying up, or otherwise not paying HMRC.
Mortgage lenders need to be made aware of incentives like that, to ensure their interest is protected. For example if they were lending you 90% of 300k, and the stamp was 30k, effectively they are giving you a 100% mortgage and the risk is all on them.
Valuers do not need to know, as their job is to tell the lender what the property is worth and if the lender's interest in the physical bricks will be protected. How the deal is structured is a matter for the lender.
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