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Is this common practice when selling a house?

245

Comments

  • #32
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Actually on reflection I'd tell them you'd reduce it to 225K on condition you pay 10K for furniture.


  • #33
    ahnowbrowncow
    Registered Users Posts: 2,562 ✭✭✭ahnowbrowncow


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

    It's tax evasion, I wouldn't be entertaining it and hopefully you're solicitor says the same.

    There are only downsides to this for you. Will it affect your loan to value ratio of your mortgage and mortgage interest? Possible extra CGT in the future when you want to sell


  • #34
    embraer170
    Registered Users Posts: 2,416 ✭✭✭embraer170


    SurplusToys wrote: »
    The estate agent sent a letter to the seller last month stating that

    "The sale has been agreed at 240k with 15k towards contents."

    Friday was the 1st time I saw this letter when my solicitor forwarded it to me.

    Your solicitor has failed by not informing you of this earlier.

    While the CGT aspect may not impact you under current rules (assuming it is your primary residence), things can change. By lowering the value of the house in the transaction, you could face a higher tax bill in the future.

    15k also seems like a huge amount for old furniture.


  • #35
    embraer170
    Registered Users Posts: 2,416 ✭✭✭embraer170


    Samuel T. Cogley wrote: »
    Actually on reflection I'd tell them you'd reduce it to 225K on condition you pay 10K for furniture.

    That actually seems like a good approach.


  • #36
    [Deleted User]
    Posts: 596 ✭[Deleted User]


    huskerdu wrote: »
    If you have signed the contract , you can’t pull out , but in this case, you should ask your solicitor.

    They can pull out until the seller has signed the contract. If the 10% has not been transferred, the seller hasn’t signed the contracts.


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  • #37
    SurplusToys
    Registered Users Posts: 44 ✭SurplusToys


    embraer170 wrote: »
    Your solicitor has failed by not informing you of this earlier.

    While the CGT aspect may not impact you under current rules (assuming it is your primary residence), things can change. By lowering the value of the house in the transaction, you could face a higher tax bill in the future.

    15k also seems like a huge amount for old furniture.

    15k is a huge amount.

    Most of the furniture looks to be 2nd hand. The only things I saw of real value where the kitchen appliances.


  • #38
    Mad_maxx
    Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    spodoinkle wrote: »
    If I bid 240 for a house and won, to be told when deposit paid "well actually you have paid 225 for the house and 15 for the contents you knew nothing about" how is it not a con



    the purpose of placing a value on the contents is often to reduce stamp duty costs for the buyer and other taxes for the vendor , it happens all of the time

    if the OP believe he is being conned , ask the vendor ( if its not too late ) to consider keeping the contents and to renegotiate for sale without contents , i doubt the price changes


  • #39
    Car99
    Registered Users Posts: 2,530 ✭✭✭Car99


    If you're put out by this and believe the house could be purchased for less You could play hardball and say I dont want the furniture my offer is now 225k .


  • #40
    ahnowbrowncow
    Registered Users Posts: 2,562 ✭✭✭ahnowbrowncow


    embraer170 wrote: »
    That actually seems like a good approach.

    It's not really, they're not likely to entertain it as it wipes out their CGT evasion gain.

    Even if they meet halfway it's a small gain to be involved in tax evasion and that gain will be much less than the extra CGT on the house if sold in the future if not the PPR.


  • #41
    Dav010
    Registered Users Posts: 13,976 ✭✭✭✭Dav010


    SurplusToys wrote: »
    15k is a huge amount.

    Most of the furniture looks to be 2nd hand. The only things I saw of real value where the kitchen appliances.

    It’s important you understand, the value assigned to the furniture is nominal for the purposes of the sale contract, they are not telling you the furniture is worth €15k.

    Again op, how is the EA scamming you?


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  • #42
    ahnowbrowncow
    Registered Users Posts: 2,562 ✭✭✭ahnowbrowncow


    Dav010 wrote: »
    It’s important you understand, the value assigned to the furniture is nominal for the purposes of the sale contract, they are not telling you the furniture is worth €15k.

    Again op, how is the EA scamming you?

    By leaving the OP to foot a future CGT bill so they can reduce their current one. How is that not a scam?


  • #43
    Valhallapt
    Registered Users Posts: 1,226 ✭✭✭Valhallapt


    This is not a con, or a scam its not tax evasion and at 15k you couldn’t even term it aggressive tax avoidance. It is a legitimate and very common practice to avoid unnecessary tax, everyone has to pay tax but they also have a right to ensure they pay no more than is necessary. A house and it’s contents are taxable at different rates, nothing wrong whatsoever to pay for them separately. In practice you agree a value for all in price on a house and then the contracts may be a little different. I am surprised at all the negativity on here about it, my understanding was that it was normal on all secondhand properties.


  • #44
    drunkmonkey
    Registered Users Posts: 28,069 ✭✭✭✭drunkmonkey


    Have you some cash your not putting into the mortgage, it might be worth having a word with the seller as if it's all going to the bank you may be able to reduce the purchase price considerably.


  • #45
    ahnowbrowncow
    Registered Users Posts: 2,562 ✭✭✭ahnowbrowncow


    Valhallapt wrote: »
    This is not a con, or a scam its not tax evasion and at 15k you couldn’t even term it aggressive tax avoidance. It is a legitimate and very common practice to avoid unnecessary tax, everyone has to pay tax but they also have a right to ensure they pay no more than is necessary. A house and it’s contents are taxable at different rates, nothing wrong whatsoever to pay for them separately. In practice you agree a value for all in price on a house and then the contracts may be a little different. I am surprised at all the negativity on here about it, my understanding was that it was normal on all secondhand properties.

    Lol, "unnecassary tax". It's tax evasion, pure and simple, they're reducing their CGT.

    There are no benefits for the OP to do this, in fact it will possibly leave the OP with a larger CGT bill in the future.


  • #46
    Darc19
    Registered Users Posts: 3,817 ✭✭✭Darc19


    [Deleted User] wrote: »
    Sounds totally illegal. Can you pull out now?

    How is it illegal?

    I'd love if people who blurt out rubbish like this could give a reason for their statement..


  • #47
    Dav010
    Registered Users Posts: 13,976 ✭✭✭✭Dav010


    ahnowbrowncow wrote: »
    By leaving the OP to foot a future CGT bill so they can reduce their current one. How is that not a scam?

    I’m wondering how an EA can decide what is in the sale contract. Perhaps you can explain how the EA is scamming the op.
    SurplusToys wrote: »

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


  • #48
    h2005
    Registered Users Posts: 1,383 ✭✭✭h2005


    If the asking price is 240k and that is what the OP is paying why does it matter how it’s broken out? I would have assumed something like this is very common if you’re selling with contents in place.


  • #49
    Valhallapt
    Registered Users Posts: 1,226 ✭✭✭Valhallapt


    ahnowbrowncow wrote: »
    Lol, "unnecassary tax". It's tax evasion, pure and simple, they're reducing their CGT.

    There are no benefits for the OP to do this, in fact it will possibly leave the OP with a larger CGT bill in the future.

    How is it evasion? That’s a big claim.


  • #50
    SurplusToys
    Registered Users Posts: 44 ✭SurplusToys


    h2005 wrote: »
    If the asking price is 240k and that is what the OP is paying why does it matter how it’s broken out? I would have assumed something like this is very common if you’re selling with contents in place.

    It's my 1st time buying so I've no idea if its common practice or not.


  • #51
    Mad_maxx
    Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    h2005 wrote: »
    If the asking price is 240k and that is what the OP is paying why does it matter how it’s broken out? I would have assumed something like this is very common if you’re selling with contents in place.

    its extremely common but thats not enough for the financial puritans


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  • #52
    Mad_maxx
    Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    Valhallapt wrote: »
    How is it evasion? That’s a big claim.

    who cares if it is ?


  • #53
    Valhallapt
    Registered Users Posts: 1,226 ✭✭✭Valhallapt


    SurplusToys wrote: »
    It's my 1st time buying so I've no idea if its common practice or not.

    It’s very common, but you are within your rights to reject their suggestion and value the contents a zero and insist on the contract being at 240 if you are more comfortable with that


  • #54
    SurplusToys
    Registered Users Posts: 44 ✭SurplusToys


    Valhallapt wrote: »
    It’s very common, but you are within your rights to reject their suggestion and value the contents a zero and insist on the contract being at 240 if you are more comfortable with that

    My solicitor is concerned that it may affect my loan offer from the bank


  • #55
    ahnowbrowncow
    Registered Users Posts: 2,562 ✭✭✭ahnowbrowncow


    Also OP, you will need to check if this affects your mortgage application.

    If you were borrowing €190k for this based on the value of €240k the LTV would be 79%. If you change the value of the house the LTV will be 84% and the interest on your mortgage will be higher. Your mortgage provider may not agree to this.


  • #56
    yabadabado
    Registered Users Posts: 16,520 ✭✭✭✭yabadabado


    OP I wouldn't have a huge issue with this but maybe go back and say you will pay 225K +10k for the furniture.

    At least try getting something out of it.


  • #57
    Mad_maxx
    Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    Valhallapt wrote: »
    It’s very common, but you are within your rights to reject their suggestion and value the contents a zero and insist on the contract being at 240 if you are more comfortable with that

    assuming the sale is near closing , the price was probably agreed towards the end of last year , house prices are up at least 5% since then in most areas , the OP is unlikely to financially benefit from not closing this sale

    to not complete purely because of this would be an expensive exercise in moral rectitude


  • #58
    Valhallapt
    Registered Users Posts: 1,226 ✭✭✭Valhallapt


    SurplusToys wrote: »
    My solicitor is concerned that it may affect my loan offer from the bank

    Yes, that may be the case. Banks have seen it a 100 times before but if it’s affecting your LTV, just explain that to the vendor that it has to be 240k on the mortgage, so contents will have to be zero. Vendor may not be happy but I doubt the’d pull out over it.


  • #59
    athlone573
    Registered Users Posts: 726 ✭✭✭athlone573


    The sellers are chancing their arm and I wouldn't go along with it,they're trying to defraud the taxpayer and or the bank.

    If they were asking 5k for some identified valuable items, mahogany chests of drawers etc then maybe fair enough.


  • #60
    maestroamado
    Registered Users Posts: 4,426 ✭✭✭maestroamado


    SurplusToys wrote: »
    I've transferred 10% to my solicitor.
    As far as I'm aware my solicitor hasn't paid this to the seller yet.
    Am I stuck?

    Once you have paid the solicitor the 10% you have a legal contract.
    If it were me i would simply that bought the house only and you want the furniture removed and house discounted 15k to reflect this.
    Has your solicitor put this in a letter to you?
    I do not think you are stuck, what is your preferred option?


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  • #61
    Baby01032012
    Registered Users Posts: 1,622 ✭✭✭Baby01032012


    And breathe....

    Probably they are trying to reduce the CGT bill on assumption they weren’t living there, do you know if that’s the case OP?

    From your perspective it reduces your stamp duty as already pointed out as it’s on value of house not the contents.

    It may or may not be issue for the bank, your solicitor will know best.

    It’s not tax evasion, how the consideration is split between property value and contents isn’t going to make much of a difference other than the small tax savings on both sides as I’ve noted.

    I had a solicitor once on a property I purchased and he suggested splitting contents from the house value, I didn’t bother in the end.


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