Seller wants to allocate portion of house purchase price for contents

morant3

We have just agreed purchase price for house. As we were getting close to agreement EA said they would include all contents if we would increase offer, We met the increase just to finally get agreement(couple of thousand).
In sale agreement email, the EA has now brokendown the overall price between house & contents.

He has given them a value of 5k saying there is a new boiler and some reasonably new white goods. The remainder of contents are trash for skip. If they would reduce the price by 5k and clear out house we would be much better off.

Overall value is fine, but afraid mortgage would only cover the house portion and we would be stuck having to stump up 5k more cash (which we don't have).

Anyone have such experiences or advise? Just say it's one price or nothing?

ravima

common enough 'trick'. However, my understanding is that contents, and I used to work in insurance, was anything that you could take with you. furniture, curtains etc. Hard to see how a boiler is contents??

If you want the house, you're stick with it. Only light at end of tunnel, is that there is no stamp duty on contents, so you save €50!

L1011

Tax fiddle or they're losing the price of the house (or a fixed % thereof) to a bank or legal settlement. There is no legitimate reason to do this.

davo10

L1011 wrote: »

Tax fiddle or they're losing the price of the house (or a fixed % thereof) to a bank or legal settlement. There is no legitimate reason to do this.

Assigning a value to contents, as long as it is reasonable is not illegal. Not sure why you are saying there is no legitimate reason for this. The op actually states that they increased their bid to include contents, assigning a value seems appropriate in that case. The rest of your post is speculation.

morant3

We had never discussed splitting the value of contents from the house. In my opinion the contents are worthless (anything of value is offset by costs to dispose the trash). Increasing our offer was an effort to close sale quickly rather than wait another few weeks to wait for new bidders.

davo10

morant3 wrote: »

We had never discussed splitting the value of contents from the house. In my opinion the contents are worthless (anything of value is offset by costs to dispose the trash). Increasing our offer was an effort to close sale quickly rather than wait another few weeks to wait for new bidders.

You increased your bid to include contents in order to seal the deal, but now you don't want the contents to be assigned a value, why?

barneystinson

davo10 wrote: »

You increased your bid to include contents in order to seal the deal, but now you don't want the contents to be assigned a value, why?

The OP said he upped his bid by a couple of grand. The contents are now being assigned a value of 5k. I'm assuming they're wondering why not 2k... what do you think yourself?

TheShow

davo10 wrote: »

You increased your bid to include contents in order to seal the deal, but now you don't want the contents to be assigned a value, why?

Because the sale price of the house is x, not x + contents. And the bank won’t give you a mortgage for x + contents. Mortgage will be based off the contracted price of the property on its own.

davo10

TheShow wrote: »

Because the sale price of the house is x, not x + contents. And the bank won’t give you a mortgage for x + contents. Mortgage will be based off the contracted price of the property on its own.

I know how this works.

You increased your bid to include contents, not the property on its own, that is what you stated in your op, so it stands to reason that the contents would be assigned a value. Otherwise the Increase in your bid would have been on the price of the property.

davo10

barneystinson wrote: »

The OP said he upped his bid by a couple of grand. The contents are now being assigned a value of 5k. I'm assuming they're wondering why not 2k... what do you think yourself?

I think it would be clearer if the op posted what the increase in the bid was to cover contents and seal the deal.

Op, did you increase your bid by €5k to include contents? If it was less than that, whatever the contents "bid" was, that is what should be on the contract.

barneystinson

davo10 wrote: »

I think it would be clearer if the op posted what the increase in the bid was to cover contents and seal the deal.

Does a couple not pretty much universally mean two?

davo10

barneystinson wrote: »

Does a couple not pretty much universally mean two?

Often means more than one, but less than lots, couple of pints/cost a couple of euro etc. But maybe it does mean 2 in this case.

morant3

Sorry, increase was 2k above prior offer. But wasn't discussed or agreed that this was for contents.
Contents were put there as an carrot to get that final increase from us, but apart from boiler (which seems very debatable that this should be separate to house) we value the contents near zero.

barneystinson

davo10 wrote: »

Often means more than one, but less than lots, couple of pints/cost a couple of euro etc.

I await the OP's response on tenterhooks...

davo10

barneystinson wrote: »

I await the OP's response on tenterhooks...

Your wait is over, you can get off the hooks.

Op, if you are not happy, pull out of the deal. But, despite what has been posted previously, this is not illegal, no contracts are signed so you have no obligation to complete.

morant3

Unfortunately I'll have no choice other than to pull out if this is a red line issue for seller.
I will be pushing back saying our offer only stands if everything is grouped into a single house price.

Thanks all for feedback

TomOnBoard

morant3 wrote: »

Sorry, increase was 2k above prior offer. But wasn't discussed or agreed that this was for contents.
Contents were put there as an carrot to get that final increase from us, but apart from boiler (which seems very debatable that this should be separate to house) we value the contents near zero.

Boiler is a fixture/fitting, like the bathroom suite, kitchen cabinets, radiators etc. Ridiculous sleight of hand by seller, given that the 5k figure was not agreed in advance. However, if they put 2k as the separate value on contents they would have some basis as that seems to have been loosely discussed.

Victor

Revenue insist on separate, not-mutually-binding contracts for contents.

Talk to your solicitor, but you might be able to get away with not buying the contents.

This may cause drama.

Mellor

morant3 wrote: »

We had never discussed splitting the value of contents from the house.

If you buy the contents, I think the "correct" think to do is to split them.

morant3 wrote: »

As we were getting close to agreement EA said they would include all contents if we would increase offer, We met the increase just to finally get agreement(couple of thousand).

As per the above, you agree to buy the contents, you did not increase you offer on the house to close quickly.

If you wanted to do the latter, you had that option too.

He has given them a value of 5k saying there is a new boiler and some reasonably new white goods. The remainder of contents are trash for skip. If they would reduce the price by 5k and clear out house we would be much better off.

2k contents plus boiler and white goods could well come to 5k.
The latter should be included in the house price as they are fixed

mvl

Victor wrote: »

Revenue insist on separate, not-mutually-binding contracts for contents.

Talk to your solicitor, but you might be able to get away with not buying the contents.

Is this because there is different tax (on seller side) for sale with contents versus sale with no contents, or why ?

Also, I thought white goods/boiler are already part of the standard sales - so their value doesn't need to be mentioned in the contract - or no ?

lawred2

The boiler can in no way be considered contents..

Sure why not the radiators, water tank, immersion tank, windows and doors as well?

Victor

mvl wrote: »

Is this because there is different tax (on seller side) for sale with contents versus sale with no contents, or why ?

Revenue's concerns will be tax based.

Real property is subject to LPT, capital gains tax and stamp duty. 'Improved' real property is normally subject to VAT instead of stamp duty.

Contents are normally considered depreciating chattels and gains are not taxed. Antiques and possibly some other special cases may be subject to capital gains tax.

Wabbit Ears

I would take issue with the boiler being on that list. Come to a fair price for the rest of the contents as listed and then just pay that separately.

You won't get away with saying the rest is zero so, realising you're probably going to have to pay something out of your own pocket, just negotiate to something you can afford.

seamus

This is some cheap bastard who has just recently replaced the boiler and feels sore about paying all that money. The boiler is not contents, it's a fundamental part of the house's heating and plumbing.

He's trying to dump all of his old crap on you and get you to foot the bill.

The purchase of the contents is and must be separate. You can sign contracts on the property without formally agreeing to buy the contents, even if you have a handshake or other informal agreement. If you later don't want them, you can then insist on vacant possession before allowing the sale to close.

Is this because there is different tax (on seller side) for sale with contents versus sale with no contents, or why ?

It used to be standard practice in the past to sell a house for (say) £100,000, and declare that £5,000 of that was contents. Stamp duty would then only be payable on £95,000.
When prices started skyrocketing, Revenue clamped down on this because people were taking the piss (i.e. selling "contents" like boilers and radiators for tens of thousands of pounds), and said that whatever the final price paid, is all liable for stamp duty.

This is why the house purchase and contents purchase must be two completely separate transactions, otherwise stamp duty is payable on the full amount.

sunshinew

I wonder if the property was originally bought through the affordable housing scheme. If sold within a certain period (up to 20 years I think) the sellers would owe the council a claw back. They may be trying to get cash for the contents to decrease what they owe.

L'prof

I know when we went sale agreed the seller said they’d reduce the asking by €1/2k (can’t quite remember) if we paid €5k of the asking price in cash for contents. Was a no brainier for us in that situation

johnnyskeleton

mvl wrote: »

Is this because there is different tax (on seller side) for sale with contents versus sale with no contents, or why ?

Also, I thought white goods/boiler are already part of the standard sales - so their value doesn't need to be mentioned in the contract - or no ?

Don't think there is any immediate tax benefit to the seller. My best guess is that he is selling under the mortgage value and he reckons he will get 5k into his hand for the contents, while the rest is just taken by the bank. Of course this isn't great, but people will try anything.

TomOnBoard

seamus wrote: »

This is some cheap bastard who has just recently replaced the boiler and feels sore about paying all that money. The boiler is not contents, it's a fundamental part of the house's heating and plumbing.

He's trying to dump all of his old crap on you and get you to foot the bill.

The purchase of the contents is and must be separate. You can sign contracts on the property without formally agreeing to buy the contents, even if you have a handshake or other informal agreement. If you later don't want them, you can then insist on vacant possession before allowing the sale to close.

It used to be standard practice in the past to sell a house for (say) £100,000, and declare that £5,000 of that was contents. Stamp duty would then only be payable on £95,000.
When prices started skyrocketing, Revenue clamped down on this because people were taking the piss (i.e. selling "contents" like boilers and radiators for tens of thousands of pounds), and said that whatever the final price paid, is all liable for stamp duty.

This is why the house purchase and contents purchase must be two completely separate transactions, otherwise stamp duty is payable on the full amount.

There was also a time when the light fittings would be removed- back to the ceiling rose. House buyers needing lanterns / torches to inspect their new properties..

TomOnBoard

johnnyskeleton wrote: »

Don't think there is any immediate tax benefit to the seller. My best guess is that he is selling under the mortgage value and he reckons he will get 5k into his hand for the contents, while the rest is just taken by the bank. Of course this isn't great, but people will try anything.

There might be a Capital Gains Tax benefit??

Bob24

L1011 wrote: »

Tax fiddle or they're losing the price of the house (or a fixed % thereof) to a bank or legal settlement. There is no legitimate reason to do this.

This.

The boiler is not contents and if they rest is mostly worthless, they are trying to hide 5k worth of the sale either from Revenue or from a party which has an interest in the sale. I was there before with a seller - no legit reason for force-selling rubbish contents at an inflated price and insist on that amount not being included on any official documents related to the sale.

davo10

Bob24 wrote: »

This.

The boiler is not contents and if they rest is mostly worthless, they are trying to hide 5k worth of the sale either from Revenue or from a party which has an interest in the sale. I was there before with a seller - no legit reason for force-selling rubbish contents at an inflated price and insist on that amount not being included on any official documents related to the sale.

Again, this is speculation and has no basis in anything the op has posted. There is absolutely nothing illegitimate nor illegal in assigning a value to contents in a property sale. The value may be open to negotiation, but there are contents so it is perfectly legal. The tax/mortgage affairs of the seller are absolutely no concern of the buyer. As no contracts are signed, the op can object to the inclusion or cost, but certainly not on the basis that it is not legitimate/legal.

JimmyMW

seamus wrote: »

The purchase of the contents is and must be separate. You can sign contracts on the property without formally agreeing to buy the contents, even if you have a handshake or other informal agreement. If you later don't want them, you can then insist on vacant possession before allowing the sale to close.

Do this if possible, just make sure the list of contents do not include the boiler or white goods etc and once contracts are signed they are bound to complete the sale at the price agreed ie €5k below your closing offer.

davo10

JimmyMW wrote: »

Do this if possible, just make sure the list of contents do not include the boiler or white goods etc and once contracts are signed they are bound to complete the sale at the price agreed ie €5k below your closing offer.

The sale will have separate forms for property, fixture and fittings, and contents. The sale will include all items on these forms. The contents/f&fs is s grey area, contents can include anything which can be easily removed without damaging the property, a fireplace or boiler can be conceivably be included in this list if no damage is done in removing them and they aren't included in f&fs list. Both contracts would be signed at same time as part of sale, refuse one, refuse all.

Bob24

davo10 wrote: »

Again, this is speculation and has no basis in anything the op has posted. There is absolutely nothing illegitimate nor illegal in assigning a value to contents in a property sale. The value may be open to negotiation, but there are contents so it is perfectly legal. The tax/mortgage affairs of the seller are absolutely no concern of the buyer. As no contracts are signed, the op can object to the inclusion or cost, but certainly not on the basis that it is not legitimate/legal.

You misread my post - never said assigning a price to contents is illegal, what I said is that there is no legitimate reason for force selling worthless contents at an inflated price and insisting that amount is not visible on any document related to the sale (which is exactly the situation the OP is describing).

As a buyer I would see it as an increased risk for the sale to get messy (and of course if the seller needs a mortgage and has no extra cash at hands, the bank won’t lend money to pay for that hidden amount).

davo10

Bob24 wrote: »

No one said assigning a price to contents is illegal, what was said is that there is no legitimate reason for force selling worthless contents at an inflated price and insisting that amount is not visible on any document related to the sale.

As a buyer I would see it as an increased risk for the sale to get messy (and of course if the seller needs a mortgage and has no extra cash at hands, the bank won’t lend money to pay for that hidden amount).

Where is the "forced sale"?

When you say there is no legitimate reason, that only leave illegitimate reasons, the implication is that the seller is doing something illegal which simply is not true. Contents depreciate in value, their value is subjective, if the op doesn't agree with the valuation, tell the seller and renegotiate price, but there is absolutely nothing illegitimate nor illegal about this so please stop implying there is.

Bob24

davo10 wrote: »

Where is the "forced sale"?

Here:

morant3 wrote: »

increase was 2k above prior offer. But wasn't discussed or agreed that this was for contents.

And then the OP got an email force-assigning a separate value for the contents they say they never agreed on.

davo10 wrote: »

When you say there is no legitimate reason, that only leave illegitimate reasons, the implication is that the seller is doing something illegal which simply is not true. Contents depreciate in value, their value is subjective, if the op doesn't agree with the valuation, tell the seller and renegotiate price, but there is absolutely nothing illegitimate nor illegal about this so please stop implying there is.

If you are selling there are legitimate reason for insisting on selling contents separately from the house at a clearly inflated price, can you quote one?

davo10

Bob, a lender can force a sale, a seller cannot force a buyer to make a higher bid, the op said they increased the bid to go sale agreed, he/she was not forced to do this anymore than any homebuyer is forced to bid more.

davo10

Bob24 wrote: »

If you are selling there are legitimate reason for insisting on selling contents separately from the house at a clearly inflated price, can you quote one?

Yes, to sell the contents for a higher price than they are actually worth, happens every day in every shop in the world. Completely legitimate, it's assigning the highest value to an item that a customer will pay. If the customer doesn't assign the sam value to it, they don't buy, sounds kinda like buying a house, doesn't it.

spaceHopper

You went up by to 2k to get the house, adding contents was a coded way of looking for cash. Buying a house is stressful, but you knowing or unknowing agreed to it.

You've got a couple of months before it closes to save up some cash. Meet them in the middle offer them 3500 for the contents you want but they clear out the rest.

As a basic rule of thumb anything which needs tools to remove is fixtures and fittings everything else is contents, for example the boiler is part of the sale.

Bob24

davo10 wrote: »

Bob, a lender can force a sale, a seller cannot force a buyer to make a higher bid, the op said they increased the bid to go sale agreed, he/she was not forced to do this anymore than any homebuyer is forced to bid more.

I think here you are countering a point no one has made. Where did anyone say they were forced to make an increased bid?

Again - the issue is with trying to force them to assign a separate value for the contents which the OP said they never agreed to do.

Bob24

davo10 wrote: »

Yes, to sell the contents for a higher price than they are actually worth, happens every day in every shop in the world. Completely legitimate, it's assigning the highest value to an item that a customer will pay. If the customer doesn't assign the sam value to it, they don't buy, sounds kinda like buying a house, doesn't it.

Again this is missing a key point, the question I was asking was not just about selling at an inflated price (which indeed there is no issue with of some people find that price acceptable - but is not the case here as the OP clearly said the contents is nowhere close to that value in their opinion).

The question I asked is to quote a legitimate reason for suggesting to include contents in the sale at an inflated price while insisting that amount is separate and not visible on any document related to the property sale.

Caliden

spaceHopper wrote: »

You went up by to 2k to get the house, adding contents was a coded way of looking for cash. Buying a house is stressful, but you knowing or unknowing agreed to it.

You've got a couple of months before it closes to save up some cash. Meet them in the middle offer them 3500 for the contents you want but they clear out the rest.

As a basic rule of thumb anything which needs tools to remove is fixtures and fittings everything else is contents, for example the boiler is part of the sale.

Nothing is signed yet so my advice to OP is to change your mind about the contents and let them take them with them and go back to your original offer.

OP increased their offer by 2k for the contents but now the contents are being valued at 5k? (which includes a boiler....)

2k worth of contents to me sounds like they're not even worth the effort anyway. Better off getting rid and getting in your own stuff.

davo10

Bob24 wrote: »

Again this is missing a key point, the question I was asking was not just about selling at an inflated price (which indeed there is no issue with of some people find that price acceptable - but is not the case here as the OP clearly said the contents is nowhere close to that value in their opinion).

The question I asked is to quote a legitimate reason for suggesting to include contents in the sale at an inflated price while insisting that amount is separate and not visible on any document related to the property sale.

The important part of your post is " in their opinion", there is a reason why property sales are not covered by the SOGASA, that is because you have a surveyor and solicitor to help you when you buy. The op first should decide if he/she wants to proceed, then discuss this item with his/her solicitor. There is nothing illegal, not legitimate nor untoward being done. The op is aware before buying that this is a condition of the sale, if he/she rejects it, then no harm done.

hognef

davo10 wrote: »

The important part of your post is " in their opinion", there is a reason why property sales are not covered by the SOGASA, that is because you have a surveyor and solicitor to help you when you buy. The op first should decide if he/she wants to proceed, then discuss this item with his/her solicitor. There is nothing illegal, not legitimate nor untoward being done. The op is aware before buying that this is a condition of the sale, if he/she rejects it, then no harm done.

It seems to me that the contents in this case wouldn't attract stamp duty. If so, and if the agreed house price was X (with contents valued at 2k), with the house now valued at X-3k (and contents at 5k), the portion of the sale that will now attract stamp duty is artificially reduced.

If this is indeed all above board, then why not assign the majority of the overall price to the contents, thereby practically removing any stamp duty liability? Where do you draw the line?

While selling the contents at an inflated price may not be illegal, surely there'll be an issue with artificially underreporting the house value.

This practice of overrepresenting the value of the contents in order to save on the stamp duty was very common in the past, but I'm pretty sure that loophole was tightened several years ago now (though I am not sure how).

johnnyskeleton

TomOnBoard wrote: »

There might be a Capital Gains Tax benefit??

I think they still have to pay capital gains on the full amount of both transactions.

Bob24

davo10 wrote: »

The important part of your post is " in their opinion", there is a reason why property sales are not covered by the SOGASA, that is because you have a surveyor and solicitor to help you when you buy. The op first should decide if he/she wants to proceed, then discuss this item with his/her solicitor. There is nothing illegal, not legitimate nor untoward being done. The op is aware before buying that this is a condition of the sale, if he/she rejects it, then no harm done.

And the OP has already decided to push back. The problem here is that they never expressed an agreement to purchase the contents separately at that price, and that there was an attempt to force this upon them in the sale agreement even though it was never agreed upon during the bidding process. That - again - is what there is no legitimate reason for doing.

davo10

hognef wrote: »

It seems to me that the contents in this case wouldn't attract stamp duty. If so, and if the agreed house price was X (with contents valued at 2k), with the house now valued at X-3k (and contents at 5k), the portion of the sale that will now attract stamp duty is artificially reduced.

If this is indeed all above board, then why not assign the majority of the overall price to the contents, thereby practically removing any stamp duty liability? Where do you draw the line?

While selling the contents at an inflated price may not be illegal, surely there'll be an issue with artificially underreporting the house value.

This practice of overrepresenting the value of the contents in order to save on the stamp duty was very common in the past, but I'm pretty sure that loophole was tightened several years ago now (though I am not sure how).

The contents value must be realistic and withstand scrutiny from Revenue, if an apartment is selling for €250k, it would be a risk assigning €100k of that to contents unless of course you could show they were actually worth that.

Just to be clear, lowering CGT on a property by assigning a value to contents is perfectly legitimate and not illegal if it can be shown that the value assigned is reasonable. Contents is a grey area, I can take a boiler out without causing damage to the structure so if it isn't on f&fs and is on contents list, then there is nothing wrong with that.

I'm not saying it is a nice thing to do, but I am saying it is legitimate and the op can walk away if he/she doesn't agree with it.

Marcusm

davo10 wrote: »

Where is the "forced sale"?

When you say there is no legitimate reason, that only leave illegitimate reasons, the implication is that the seller is doing something illegal which simply is not true. Contents depreciate in value, their value is subjective, if the op doesn't agree with the valuation, tell the seller and renegotiate price, but there is absolutely nothing illegitimate nor illegal about this so please stop implying there is.

If it’s all contained in the same contract, no issue should arise with such a purchase price allocation. However, there is something illegitimate in seeking to establish a second contract for the sale of a fixture the ownership of which transfers with the land! A separate contract for the transfer of loose furniture etc would equally be fine.

the_syco

morant3 wrote: »

He has given them a value of 5k saying there is a new boiler and some reasonably new white goods. The remainder of contents are trash for skip. If they would reduce the price by 5k and clear out house we would be much better off.

If you don't pay the 5k cash, and you have a look at the house the day before you buy, only to find out that the boiler is missing; would you walk away?

Mike3549

the_syco wrote: »

If you don't pay the 5k cash, and you have a look at the house the day before you buy, only to find out that the boiler is missing; would you walk away?

Boiler is a part of the house, its not white goods nor furniture, it shouldnt be labeled as content.
So does the windows, doors, stairs and roof tiles also count as a content?

Rothmans

johnnyskeleton wrote: »

I think they still have to pay capital gains on the full amount of both transactions.

Nope. Contents are generally wasting chattels and not subject to CGT.

Also, if it's the family home, it wouldn't be subject to CGT either.