Cash buyer

jocotty

Hi,

I came across a site for sale, and the price was 40k, and the man who was selling it said he'd take 35K cash.

i am not the buyer (just interested in property prices), but as i know nothin about money or tax, what are the implications for both the buyer and seller, in this sort of scenario?

how is the buyer, who pays cash, losing out in this case? . . considering he/she is getting it for 5k cheaper. any other implications?

i assumn the whole idea for the seller is to avoid tax. would it be much of a gain for the seller, or are we only talkin a few bob?

just curios, thats all.

thanks,
Jo

Poor Uncle Tom

This question is far more suited to the Accommodation & Property Forum than to the Construction & Planning Forum, but I would imagine that whatever forum it ends up in no one here is going to condone tax evasion.....

dearg lady

If something is being sold for less than market value, tax is still chargeable on the market value. Ir revenue know about it of course!

killers1

jocotty wrote: »

Hi,

I came across a site for sale, and the price was 40k, and the man who was selling it said he'd take 35K cash.

i am not the buyer (just interested in property prices), but as i know nothin about money or tax, what are the implications for both the buyer and seller, in this sort of scenario?

how is the buyer, who pays cash, losing out in this case? . . considering he/she is getting it for 5k cheaper. any other implications?

i assumn the whole idea for the seller is to avoid tax. would it be much of a gain for the seller, or are we only talkin a few bob?

just curios, thats all.

thanks,
Jo

Makes no difference if buyer pays in cash or not. Land still needs to be registered in purchasers name and price recorded. Only benefit to seller is that they now fairly quickly whether buyer has funds or not and transaction can be completed quicker as there is no mortgage application and related paperwork.

silja

I am thinking they don't mean cash as in euros in a suitcase- they mean they'll give the lower price to someone not in a property chain, who can transfer the money immediately once the sale is done, no need to wait for mortgage approval etc.

jocotty

silja wrote: »

I am thinking they don't mean cash as in euros in a suitcase- they mean they'll give the lower price to someone not in a property chain, who can transfer the money immediately once the sale is done, no need to wait for mortgage approval etc.

ya, i think you might be right. thanks for that.

Jo

Tigger

cash means cash
i hate people that don't know what cash means using the term

Dob74

Cash means he has the money in the bank ready to go. If you have to get a loan it's more complictated.
It takes a few weeks to months to sort a loan, cash means the deal can be done quick.

Tigger

Dob74 wrote: »

Cash means he has the money in the bank ready to go. If you have to get a loan it's more complictated.
It takes a few weeks to months to sort a loan, cash means the deal can be done quick.

no

Dob74

Tigger wrote: »

no

Yes


Cash on small transactions means cash.
but cash on a property deal means that no loans are required. Land has to be registered in the new owners name so paying cash, cheque doesnt matter, just no loans involved.

Tigger

Dob74 wrote: »

Yes


Cash on small transactions means cash.
but cash on a property deal means that no loans are required. Land has to be registered in the new owners name so paying cash, cheque doesnt matter, just no loans involved.

in answer to this

no

to some people 40K is small beans

cash means cash

Senna

Tigger wrote: »

in answer to this

no

to some people 40K is small beans

cash means cash

What are you on about???

Do you mean cash means the buyer comes with 35k in €notes or the deals off?

If a transaction involves land registration, deeds, solicitor etc, then cash means money, how that payment is made is irrelevant. All the seller what's to know is that the buyer has the money and can complete A.much sooner than if a mortgage/loan is involved and B. deal wont collapse if a third party is involved.

If it was a car sale for €40k and the seller would accept €35k cash, then yes, probably cash would be all they would except at that price.

Marcusm

dearg lady wrote: »

If something is being sold for less than market value, tax is still chargeable on the market value. Ir revenue know about it of course!

This only applies if the buyer and seller are connected or not dealing at army's length, neither of which sound like the case here. SOmeone selling something for a quick sale for a price less than he might get by waiting does not incr any tax penalty.

StillWaters

Marcusm wrote: »

dearg lady wrote: »

If something is being sold for less than market value, tax is still chargeable on the market value. Ir revenue know about it of course!

This only applies if the buyer and seller are connected or not dealing at army's length, neither of which sound like the case here. SOmeone selling something for a quick sale for a price less than he might get by waiting does not incr any tax penalty.

Of course it does. The land needs to be transferred regardless of how payment is paid, so there is a stamp duty liability, which alerts Revenue as to CGT. If the cost is substantially below Market rates, alarm bells will go off.

This does not seem to be substantially below the Market rate, so the vendor is probably just looking for a quick, hassle free sale.

Marcusm

StillWaters wrote: »

Of course it does. The land needs to be transferred regardless of how payment is paid, so there is a stamp duty liability, which alerts Revenue as to CGT. If the cost is substantially below Market rates, alarm bells will go off.

This does not seem to be substantially below the Market rate, so the vendor is probably just looking for a quick, hassle free sale.

Care to cite the part of the taxes act which impose a price other than the contract price except in the circumstances I've outlined?

Tigger

Senna wrote: »

What are you on about???

Do you mean cash means the buyer comes with 35k in €notes or the deals off?

If a transaction involves land registration, deeds, solicitor etc, then cash means money, how that payment is made is irrelevant. All the seller what's to know is that the buyer has the money and can complete A.much sooner than if a mortgage/loan is involved and B. deal wont collapse if a third party is involved.

If it was a car sale for €40k and the seller would accept €35k cash, then yes, probably cash would be all they would except at that price.

i've worked in this field since 1991 (logistics an supply)
often the price written on paperwork is not the price being paid
if a man **** 100k for a house he built he will often take 60k + 20k cash it saves him capital gains and it saves the buyer 20k
if you don't believe me i don't care i'm answering the op not you

Tigger

StillWaters wrote: »

Of course it does. The land needs to be transferred regardless of how payment is paid, so there is a stamp duty liability, which alerts Revenue as to CGT. If the cost is substantially below Market rates, alarm bells will go off.

This does not seem to be substantially below the Market rate, so the vendor is probably just looking for a quick, hassle free sale.

the market no longer has rates

StillWaters

Tigger wrote: »

the market no longer has rates

That's an oxymoron.

Dob74

Tigger wrote: »

i've worked in this field since 1991 (logistics an supply)
often the price written on paperwork is not the price being paid
if a man **** 100k for a house he built he will often take 60k + 20k cash it saves him capital gains and it saves the buyer 20k
if you don't believe me i don't care i'm answering the op not you

Slightly different scenario.
Builders have taken the last 20k cash to avoid VAT.
But the most of the transaction would have to be above board.
I am sure this happens still in some cases but revenue have been cracking down on this.

jocotty

so, is it a win-win situation for the buyer that gets it a bit cheaper - if they have the cash - or is there a hidden catch?

jo

StillWaters

No catch for the purchaser, it's the vendor takes the hit for a lower price in order to facilitate a quick and hassle free sale.

nompere

Marcusm wrote: »

Care to cite the part of the taxes act which impose a price other than the contract price except in the circumstances I've outlined?

While the amounts in this particular case are too low, Section 5 Capital Acquisitions Tax (Consolidation) Act 2003 may apply in these circumstances.

P. Breathnach

jocotty wrote: »

so, is it a win-win situation for the buyer that gets it a bit cheaper - if they have the cash - or is there a hidden catch?

jo

If the transaction is structured so as to allow the evasion of tax, then there is a catch. Not very hidden between the parties to the deal.

Marcusm

nompere wrote: »

While the amounts in this particular case are too low, Section 5 Capital Acquisitions Tax (Consolidation) Act 2003 may apply in these circumstances.

Absent any special relationship between buyer and seller, the price agreed between third parties bargaining at arms length is the "full consideration" and could not be argued by Revenue or accepted by a court as anything else. The section cited is intended (since its intro in 1976) to cover transactions where a non market value is imposed asopposedto the situation as here where a fully funded purchaser is the only person with whom the seller is willing to transact.

Others posts here have diverged into money under the counter scenarios under which I agree a different analysis would apply (albeit not likely to give rise to a CAT liability but more likely an action for conspiracy to defraud the public revenue).

shangri la

Dob74 wrote: »

Slightly different scenario.
Builders have taken the last 20k cash to avoid VAT.
But the most of the transaction would have to be above board.
I am sure this happens still in some cases but revenue have been cracking down on this.

just vat on the 20k cash or is there a min payment before vat is applied to a builders sale?