Is this common practice when selling a house?

Victor

Mad_maxx wrote: »

you are not being scammed , the house costs 240 k regardless of whether you are getting contents or no more than the bulb holders in the ceiling , if you have a moral objection to the whole thing , thats fine but thats all this is here , you are not being conned out of extra money

Not quite.

If the buyer ever rents out the property or CGT is imposed on principal private residences, then the buyer will be out of pocket.

Valhallapt

Victor wrote: »

Not quite.

If the buyer ever rents out the property or CGT is imposed on principal private residences, then the buyer will be out of pocket.

If it becomes not his PPR and he sells it on with zero value contents then he may have a taxable gain of €15k or a circa 5k liability.

embraer170

Victor wrote: »

Not quite.

If the buyer ever rents out the property or CGT is imposed on principal private residences, then the buyer will be out of pocket.

Exactly. And in the economic climate forecast for the coming years , I would not exclude seeing CGT imposed on principle private residences.

JeffKenna

The ability to pay the extra €15k out of your own funds is the big issue here. Say the mortgage is 90% of €240k, you'll be losing the mortgage on 90% of €15k. If the OP can afford it fine, a lot of people wouldn't have that cash flow in addition to the deposit.

Darc19

Years ago it was common practice but the buyer asking. It brought the stamp duty down a few Bob.

I can't see any tax advantages for the seller.

banie01

Darc19 wrote: »

Years ago it was common practice but the buyer asking. It brought the stamp duty down a few Bob.

I can't see any tax advantages for the seller.

The tax advantage has been outlined a few times on thread.
The OP is buying a property that the vendor holds as an investment property.
The advantage of reducing the "sale" price reduces the vendors immediate CGT liability.

SurplusToys wrote: »

The seller owned the house just to rent it out. They weren't living there

SurplusToys

banie01 wrote: »

The tax advantage has been outlined a few times on thread.
The OP is buying a property that the vendor holds as an investment property.
The advantage of reducing the "sale" price reduces the vendors immediate CGT liability.

Exactly this, the seller stands to save 33.3% of 15k.

jimmycrackcorm

appledrop wrote: »

The buyer has clearly stated here that no other bids on property so doesn't look at any great risk of losing it.

To be honest I'd be afraid already paying over the odds as no other bidders and upped the price by themselves from 225 to 240 which is that why I asked how much did bank value house for when giving mortgage approval?

It's up to buyer how much they want to buy the house but as a 1st time buyer I feel they are been taken for advantage big time.

In the buyer's place, I'd be arguing for a discount off the 15k. Ask for a list of the furniture and offer what it's actually worth, which probably is closer to a third.

It's obviously in the seller's interest to reduce the house price by 15k so use it as a negotiating tactic. If 240k is the agreed purchase price then what's the point of doing the split transaction otherwise. The buyer isn't gaining anything so has the upper hand. If there were no other bids then it's in the seller's interest to do a deal.

I can see the potential benefits to the seller.

Other than a very small stamp duty saving,
I'd don't see any benefit to the OP from entertaining the request.

What's in it for them?

Dav010

[Deleted User] wrote: »

I can see the potential benefits to the seller.

Other than a very small stamp duty saving,
I'd don't see any benefit to the OP from entertaining the request.

What's in it for them?

Get the deal done and get on with moving to a new home.

Triangle

embraer170 wrote: »

Exactly. And in the economic climate forecast for the coming years , I would not exclude seeing CGT imposed on principle private residences.

That would never get the go ahead. There'd be absolute uproar if this was even discussed of being brought in.

NickNickleby

I'd be looking at the application form that was submitted to the Mortgage Provider. I'd say there'd be some issue with altering the value of the property subsequent to getting loan approval.

I wonder if the vendor is trying to scupper the sale in light of recent market trends.

If this was me, I'd be all over my solicitor to protect my mortgage approval. I'd also go going back over records to see if the original advert from the EA had suggested the asking price included furniture. Not sure what leverage that would give me, but I'd probably be rattling the EA's cage if there was any doubts here.

I would think its the EA's job to know how mortgage approval works, and being party to an arrangement that seeks to undermine that, doesn't look good to me.

The vendor can do anything they want BEFORE you sign an agreement. Very surprised at your solicitor here.

SurplusToys

NickNickleby wrote: »

I'd be looking at the application form that was submitted to the Mortgage Provider. I'd say there'd be some issue with altering the value of the property subsequent to getting loan approval.

I wonder if the vendor is trying to scupper the sale in light of recent market trends.

If this was me, I'd be all over my solicitor to protect my mortgage approval. I'd also go going back over records to see if the original advert from the EA had suggested the asking price included furniture. Not sure what leverage that would give me, but I'd probably be rattling the EA's cage if there was any doubts here.

I would think its the EA's job to know how mortgage approval works, and being party to an arrangement that seeks to undermine that, doesn't look good to me.

The vendor can do anything they want BEFORE you sign an agreement. Very surprised at your solicitor here.

The original advertisement for the property states "Contents Included"

dubrov

OP, you were bidding on the house plus furniture.

The vendor is now splitting out the value so as to reduce their CGT bill but you'll also benefit from a small Stamp duty reduction. As long as it remains your PPR you won't have to pay CGT on it.

It sounds like the 15k is probably an overstatement of the value of the furniture. If you think it is, you could always go back to the vendor and suggest a different split (e.g. 235k for the house and 5k for the furniture).

I doubt you'll get a reduction on the overall price though as you bid 240k for house plus contents and that is what you are getting.

You can walk away any time before you sign contracts.

coylemj

Triangle wrote: »

That would never get the go ahead. There'd be absolute uproar if this was even discussed of being brought in.

Never mind the public reaction, imposing CGT on the sale of your PPR would immediately lock down a significant % of the housing stock and the property market ladder would grind to a halt. Because if trading down meant incurring a tax liability, people would just stay put.

NickNickleby

SurplusToys wrote: »

The original advertisement for the property states "Contents Included"

aah, thanks for that snippet - sorry if I should have noticed it earlier in the thread. That's their "get out of jail" card.

OK, that's them and the EA off the hook. Now its down to haggling over relative values of house/furniture. But the caveat over the value disclosed during the loan application still stands - I think.

Be careful not to jeopardise this approval. If you have to go back to the market, it might be painful.

Good luck with it. Make sure they understand you've been put in a difficult position, they might play ball.

Wildly Boaring

OP.
Your solicitor is naive.
This happens pretty often

Your initial question was if this will affect your mortgage

Yes.
The bank will give a mortgage for you to buy the house. Not tax advantageous chairs and sofas.

So your mortgage is based on a property of €225000
If you don't have the deposit and the extra €15000 you can't buy this house.

If this is the case instruct your solicitor to reject the contract in it's current form and have drawn up as agreed. But this is "costing the seller €5000" in capital gains.

coylemj

SurplusToys wrote: »

Honestly one of the 1st things we were going to do when we moved in was to get the furniture collected and donate it somewhere.

Forget about donating furniture, you'll have to pay someone to take it away. Hopefully someone with a waste permit.

All of the charity shops are closed and even if they were open, none of them want old furniture.

Marcusm

coylemj wrote: »

Never mind the public reaction, imposing CGT on the sale of your PPR would immediately lock down a significant % of the housing stock and the property market ladder would grind to a halt. Because if trading down meant incurring a tax liability, people would just stay put.

Not really, it's a tax which can be defined appropriately with either a large exempt amount (as is the case in the US where 250k is exempt/500k per married couple) or an element of rollover relief where the gain is not taxed provided the proceeds are reinvested in a new PPR. This latter methodology only taxes gains which are extracted and unused for a similar property. i don't see it being introduced here until there is a significant element of true left wingers in government.

Darc19

banie01 wrote: »

The tax advantage has been outlined a few times on thread.
The OP is buying a property that the vendor holds as an investment property.
The advantage of reducing the "sale" price reduces the vendors immediate CGT liability.

I didn't go through the full thread.

Flooring, appliances, garden landscaping, curtains, lighting. You could argue €15,000, but probably better at €10,000.

It's simply the opposite of what was done when €10k would mean jumping stamp duty brackets.

Nothing illegal about it whatever, once you can show "reasonable" figures.

mrslancaster

Darc19 wrote: »

I didn't go through the full thread.

Flooring, appliances, garden landscaping, curtains, lighting. You could argue €15,000, but probably better at €10,000.

It's simply the opposite of what was done when €10k would mean jumping stamp duty brackets.

Nothing illegal about it whatever, once you can show "reasonable" figures.

IIRC there was some regulation brought in around 2008 that stamp duty on residential property must be applied to the total amount paid for the property including contents & furniture. Think there was a hefty fine for incorrect returns. It could be different now but back then it wasn't allowed to reduce the purchase amount by xxx for furniture in order to reduce the stamp duty liability.

Revenue get all the information about property sales so presume the seller's sale figure would need to match up to their records when he does the CGT returns on the property. Can seller not reduce the gain by the costs of selling the property?

Can't see why the OP would agree to this if stamp duty is the same and it could affect their mortgage. That's a big chunk if the bank change the loan amount.

maestroamado

SurplusToys wrote: »

The original advertisement for the property states "Contents Included"

out of interest how much of a deposit did you pay?

ted1

SurplusToys wrote: »

So I’m towards the end of the process of buying my first home.
In the end we settled for 240k.

The sellers solicitor is now asking that the price on the transfer deed be reduced to 225k.

This figure of 225k according to the solicitor 240k minus 15k for furniture.


Is this normal practice?


Would appreciate hearing some opinions.

Do it for 225k and then tell them you don’t want the furniture.

Darc19

SurplusToys wrote: »

The original advertisement for the property states "Contents Included"

This actually makes a difference.

Seller clearly states that they are selling the house with the contents. You had a bid of €240k accepted for what they were selling "House + Contents"

The breakdown was not provided and you did not ask for it. They could says €140k for the house and 100k for the contents if they wanted, but revenue would have an issue with that and probably open an investigation

But €15k value on contents is not unreasonable and as the brochure very clearly stated that it was "Contents included", there is nothing untoward or underhand whatsoever in the requested split and possibly they priced this in when agreeing to your offer.


If you have a personal issue with it and you haven't signed contracts, walk away - plenty of others will have no issue whatsoever

Darc19

ted1 wrote: »

Do it for 225k and then tell them you don’t want the furniture.

sale was for house and contents and advertised as such. So seller's EA, sellers solicitor and seller are 100% above board from the beginning.

Buyer, as admitted, is not experienced as its their 1st house and simply made the query.

The answer is - No the buyer is not being scammed in any way shape or form.

Homer

The answer also is, the vendors are trying to pull a fast one on revenue!

AndrewJRenko

Valhallapt wrote: »

How are the defrauding the tax payer. If I go to the supermarket and pay 23% vat on chocolate bars and also buy some sanitary towels am I defrauding the tax payer if I don’t pay 23% on the sanitary towels?? Different items carry different levels of tax. Unless the vendor has removed the kitchen, light fittings, carpets, and left just a shell of a house then the buyer in buying different things at once, and the tax code clearly allows this.

The tax code doesn't allow you to designate a nominal €15k sale price for a pile of sh1te.

yabadabado wrote: »

Can you please explain how they are defrauding the tax payer ?

By reducing stamp duty, and possibly their future LPT liabililty.

Valhallapt wrote: »

15k to furnish a house is not outlandish. True it may be inflated, you might not agree it’s worth 15k, but if the vendor is ok with it, I know I would be, then it’s all legit and above board.

It's not €15k to furnish a house though. It's €15k for a pile of oul sh1te.

Revenue have very strong anti-avoidance powers, both specific and general.

https://www.revenue.ie/en/self-assessment-and-self-employment/tax-avoidance/legislative-tools-to-challenge-tax-avoidance.aspx

If they choose to sniff around at the transaction, particularly by looking at previously published prices, they could decide to come after you for any loss of tax, with surcharges or interest or penalties on top.

Hard to see what benefit arises for you from this.

Mad_maxx

AndrewJRenko wrote: »

The tax code doesn't allow you to designate a nominal €15k sale price for a pile of sh1te.



By reducing stamp duty, and possibly their future LPT liabililty.



It's not €15k to furnish a house though. It's €15k for a pile of oul sh1te.

Revenue have very strong anti-avoidance powers, both specific and general.

https://www.revenue.ie/en/self-assessment-and-self-employment/tax-avoidance/legislative-tools-to-challenge-tax-avoidance.aspx

If they choose to sniff around at the transaction, particularly by looking at previously published prices, they could decide to come after you for any loss of tax, with surcharges or interest or penalties on top.

Hard to see what benefit arises for you from this.

Benefit of buying a home ?

maestroamado

You did not answer what i asked earlier.
Basically your deposit is 10% of whatever.
To close you need the 90%
I expect your solicitor fluxed up....

AndrewJRenko

Mad_maxx wrote: »

Benefit of buying a home ?

Is the vendor going to walk away, given they had no other offers?