The legality of buying contents seperately to avoid stamp duty

Andrew Duffy

I found this, which describes the situation perfectly:

It is perfectly reasonable to buy the contents of any house. But I think the real question is how do Revenue treat related contracts i.e. Contracts for purchase of property PLUS contract for purchase of contents insofar as stamp duty and stamp duty thresholds are concerned.

My view is that when you’re on the cusp of the stamp duty thresholds that ones mind tends to gravitate towards seeking mechanisms not to pay an amount over and above a lower threshold.

However, Revenue (contrary to the opinion of many of my clients) are not stupid. They cover this position in a number of ways. One, there is a certificate in the Purchase Deed to be drafted by the Purchasers Solicitor and signed by both Purchaser and Vendor confirming that there is no series of related contracts and see the certificate below.

Secondly, they make the professionals involved in the transaction carry a primary obligation to make sure that the correct stamp duty is paid ergo none of them will get involved in anything that (a) is wrong and (b) exposes them to any risk – why would they?

Finally, there is seldom any benefit for a vendor in this except the possibility of being involved in a fraud plus the only way to enforce a contract for the sale/purchase of contents is to have a written contract – how else do the parties enforce it when something goes wrong?

So there is nothing wrong in buying the contents. But, if this is done and the transaction cost is on the edge of the stamp duty threshold and the related contract for contents pushes the whole matter over the stamp duty threshold, you pay stamp duty on the price for the property only but at the higher rate.

The rule is “higher rate, lower amount”

This is the certificate :

It is hereby certified that the consideration (other than rent) for the sale/lease is wholly attributable to residential property and that the transaction effected by this instrument does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration (other than rent) which is attributable to residential property, or which would be so attributable if the contents of residential property were considered to be residential property, exceeds €127,OOO / €190,500 / €254,OOO / €317,500 / €381,OOO / €635,OOO.

To summarise:

• stamp duty is payable on that portion of the contract attibuted to the purchase of the property
• the stamp duty rate is determined by the complete value of the contract
• seperate contracts are not a legal option due to the declaration that must be signed by your solicitor
• a gentleman's agreement may be an option so long as it isn't construed by Revenue as a contract, but leaves both buyer and seller open to problems - the seller could refuse to sign the contract until you pay for the furniture, then refuse to sign it at all; or if the deal were done in the other order the buyer could refuse to buy the furniture after signing the contract

MorningStar

To sumerise you were wrong and I was right. You don't even have proof it's just another post on another forum? What was the point I also reported you for PM an insult to me:)

kluivert

You girls want to fight go ahead.....

If you buy a company you are advised to buy the shares only.

If there is stock in the company, get a stock transfered "by delievry", there is no stamp duty on stock transferred by delievery.

I am sure the same princilpe can be applied to the contents of the house.

Now if you want further clarification on this point, there will be a fee.

Andrew Duffy

In what way does that make me wrong? That's what I said all along - you can't reduce the stamp duty boundary by messing about with contracts. Are you trying to pretend that the "common practice" you were talking about was the shaving of a few hundred by paying duty at the higher rate on just the house price?

I have better things to do with money than to pay a lawyer to write a copyright-free, blindingly obvious, answer to a question so the message above, specifically the declaration that must be signed, is the best I'm going to do. I strongly advise anyone considering a contrived deal in an attempt to reduce stamp duty liability to not do so.

Andrew Duffy

kluivert wrote:

I am sure the same princilpe can be applied to the contents of the house.

It can - you pay duty on the price of the house, not the contents. The difference is that stamp duty on shares does not have seperate bands and thus the extra requirement that the total value of the contract does not exceed the next higher boundary isn't required.

dub_mk_iii

I heard of a guy 'Jimbo' who was buying a house and got a bit of a shock when he realised that he had just gone over a stamp duty boundary.

Anxious to not let the sale fall throught he asked if the seller would revise the price back down below the stamp duty barrier as he couldn't afford it otherwise.

He suggested to the seller that they keep the contents and flog them on ebay or something to make up the difference.

The seller wasn't very happy about this.

Then in a moment of inspiration he remembered 'Uncle Fred' who loved buying and selling stuff.

Uncle Fred was quite happy to pay cash for the contents and he dropped some money into the seller's bank account before heading off to deepest Africa on safari.

The house sale proceeded happily (though very slowly due to various legal snags) but in the end the house was sold with no contents included.

Fred still hasn't returned from his adventuring so Jimbo is looking after the bits and pieces for him

The_Conductor

Nice one Fred......
I think we're going around in circles here on this topic......