Do the stamp duty rates dictate the selling price?

thejuggler

Contemplating putting my home (3 year old 3 bedroom semi Cork surburbs) on the market. Have seen a few in the estate on the market already this year. guide price was €365k. Does this indicate that the final selling price will go no higher than 381k (the stamp duty cut off point)?
This would be roughly 4.5 per cent higher than the guide price.
What happens in practice - do bidders offer cash to push the bids higher?

The_Conductor

In practice some bidders offer to pay cash to buy the furnishings of the house seperately. From talking to the Revenue Commissioners (I'm actually going for a job with them) any amounts in excess of E20k will be investigated- as will any contracts stipulating that one sale is dependent on the other. In short- Revenue know whats happening and are cracking down on it.

It is illegal to offer cash in excess of a stated amount and to lodge false documentation for stamp duty purposes. If caught both buyer and seller would be liable to investigation/ Fines / legal reprecussions and naming in Iris Oifigiul.

Regarding the price not going above 381k- as Publilius Syrus is quoted as saying almost 2000 years ago "Everything is worth what its purchaser will pay for it".
If someone wants one of the houses badly enough- the 381k barrier may well be breached, irrespective of the Stamp Duty implications.

Borzoi

smccarrick wrote:

If someone wants one of the houses badly enough- the 381k barrier may well be breached, irrespective of the Stamp Duty implications.

By my observation it, tends to happen in lumps - if the stamp duty threshold is going to be broken, it will be broken by a large amount. ie With the cut 0ff at €381K, very few properties are laible to sell at €385K, more likely around €400K, as buyers have to have the extra money to pay the stamp, the extra stamp form 385 - 400 is not that much.

aniascor

As someone who was looking to buy below the 317,500 threshold, i think it's safe to say that yes it does. Regardless of whether the house is advertised at 295 000, 305 000, or 315 000, when the bidding starts, it's a race to see who can get the 317 500 bid in first.

At that point, (it has been my experience), the estate agent starts "mentioning" that "some people" if they don't want to break the FTB threshold, offer cash for fixtures and fittings. The estate agent is very quick to point out that they are not saying that this is what you should do, just that it is what "some people do."

This is a very grey area legally, and one I wanted to avoid personally, so we weren't willing to do it. But based on bidding wars I was involved in, I would guess that the first 5-10,000 over the threshold is offered in cash by a lot of buyers, and then the real bidding starts again - usually at around 325,000.

It really makes me wonder if the threshold change is the real reason the house prices jumped up so much over the past couple of years. I wonder if it had been left as it was would the crazy increases of the past couple of years have happened. Or if it was removed completely and everyone had to pay stamp duty (maybe with different rates for FTBs, home purchasers, and investors) would it help to make houses more affordable? Who knows? Perhaps that would be the very thing to spark this possible crash that is the cause of so much debate in another thread on this forum!