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Seller wants to allocate portion of house purchase price for contents

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  • 13-08-2018 8:16pm
    #1
    morant3
    Registered Users Posts: 6 ✭


    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?
    Tagged:


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    #2
    ravima
    Registered Users Posts: 848 ✭✭✭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!


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    #3
    L1011
    Registered Users Posts: 68,531 ✭✭✭✭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.


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    #4
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭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.


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    #5
    morant3
    Registered Users Posts: 6 ✭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.


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    #6
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭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?


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    #7
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭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?


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    #8
    TheShow
    Registered Users Posts: 1,157 ✭✭✭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.


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    #9
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭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.


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    #10
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭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.


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    #11
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭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? :confused:


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    #12
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭davo10


    barneystinson wrote: »
    Does a couple not pretty much universally mean two? :confused:

    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.


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    #13
    morant3
    Registered Users Posts: 6 ✭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.


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    #14
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭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...


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    #15
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭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.


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    #16
    morant3
    Registered Users Posts: 6 ✭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


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    #17
    TomOnBoard
    Registered Users Posts: 5,109 ✭✭✭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.


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    #18
    Victor
    Registered Users Posts: 78,365 ✭✭✭✭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.


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    #19
    Mellor
    Registered Users Posts: 39,250 ✭✭✭✭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


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    #20
    mvl
    Registered Users Posts: 1,229 ✭✭✭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 ?


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    #21
    lawred2
    Registered Users Posts: 24,346 ✭✭✭✭lawred2


    The boiler can in no way be considered contents..

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


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    #22
    Victor
    Registered Users Posts: 78,365 ✭✭✭✭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.


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    #23
    Wabbit Ears
    Registered Users Posts: 3,043 ✭✭✭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.


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    #24
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭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.


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    #25
    sunshinew
    Registered Users Posts: 111 ✭✭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.


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    #26
    L'prof
    Registered Users Posts: 12,032 ✭✭✭✭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


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    #27
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,502 Mod ✭✭✭✭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.


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    #28
    TomOnBoard
    Registered Users Posts: 5,109 ✭✭✭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..


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    #29
    TomOnBoard
    Registered Users Posts: 5,109 ✭✭✭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??


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    #30
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭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.


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    #31
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭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.


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