Seller wants to allocate portion of house purchase price for contents

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.

davo10

Mike3549 wrote: »

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?

I suspect windows, stairs and roof tiles would be considered structure, and even if they weren't you would probably cause structural damage by removing them. I agree with you that a boiler should be considered part of structure of house, but it is something which can be removed without causing damage so it could be argued that it is part of contents and can be listed as such. I have seen properties where doors/light fittings/immersion tank/fireplace has been removed, so it does happen.

Look, irrrespective of our opinion of the morality of doing this, the fact is that the op is being informed of the value being assigned to the contents before contracts are signed, not during or after. The op can discuss this with his/her solicitor and either accept or reject it. If it's in a desirable area then the vendor probably won't be too put out about relisting it.

Fol20

I’ve dealt with situations like this before. All I can say is not to waste time on this. One of two things will happen here. You will either pay the 5k for the content even if it is trash or move on to another property. There is a reason for this type of setup so no point complaining about it. Is the house worth the extra 5k for the crap they are giving you. If it is take it. If it isn’t move on.

Marcusm

davo10 wrote: »

I suspect windows, stairs and roof tiles would be considered structure, and even if they weren't you would probably cause structural damage by removing them. I agree with you that a boiler should be considered part of structure of house, but it is something which can be removed without causing damage so it could be argued that it is part of contents and can be listed as such. I have seen properties where doors/light fittings/immersion tank/fireplace has been removed, so it does happen.

Look, irrrespective of our opinion of the morality of doing this, the fact is that the op is being informed of the value being assigned to the contents before contracts are signed, not during or after. The op can discuss this with his/her solicitor and either accept or reject it. If it's in a desirable area then the vendor probably won't be too put out about relisting it.

It’s not a question of whether it can be removed but whether it is a fixture on completion date. If it wasn’t s then any purported separate contract for sale if the boiler is a dead letter, it has no purpose or effect.

davo10

Marcusm wrote: »

It’s not a question of whether it can be removed but whether it is a fixture on completion date. If it wasn’t s then any purported separate contract for sale if the boiler is a dead letter, it has no purpose or effect.

I stand to be corrected, but I don't think any contracts have been signed by op, think it's only at sale agreed stage.

Marcusm

davo10 wrote: »

I stand to be corrected, but I don't think any contracts have been signed by op, think it's only at sale agreed stage.

THe point I sm making is that if it is still a fixture then it cannot be sold separately as the house purchase contract includes all that is affixed to the house (or the plot of land technically). In order to effect a separate sale of it, it would have to be removed!

davo10

Marcusm wrote: »

THe point I sm making is that if it is still a fixture then it cannot be sold separately as the house purchase contract includes all that is affixed to the house (or the plot of land technically). In order to effect a separate sale of it, it would have to be removed!

Anything which can be removed without causing damage to the structure of a property can be included in the list of contents. I can remove a boiler without causing damage, I just disconnect the pipes, takes me about half an hour. So I could list that in the contents, I wouldn't, but I could, so what you are posting is wrong. Contents will be listed on a seperate contract during sale, I don't think op has gotten to contracts yet.

If boiler is listed on contents form and the op refuses that part of sale, then there will be no boiler when sale is complete.

Bob24

davo10 wrote: »

If boiler is listed on contents form and the op refuses that part of sale, then there will be no boiler when sale is complete.

I’d say there is virtually no chance of this happening. Physically removing the boiler is more trouble than anything for the seller and it’s unlikely they’ll reuse it somewhere else (also there is always a small risk of damaging something when you remove it which is not worth taking). Pricing it separately is most likely just a way to insulate some cash from the main sale.

So most likely either they’ll back down and include the boiler in the main house sale, or they will cancel the sale altogether because they want that cash insulated. Extremely unlikely they would bother removing the boiler.

davo10

Bob24 wrote: »

I’d say there is virtually no chance of this happening. Physically removing the boiler is more trouble than anything for the seller and it’s unlikely they’ll reuse it somewhere else (also there is always a small risk of damaging something when you remove it which is not worth taking). Pricing it separately is most likely just a way to insulate some cash from the main sale.

So most likely either they’ll back down and include the boiler in the main house sale, or they will cancel the sale altogether because they want that cash insulated. Extremely unlikely they would bother removing the boiler.

Agree with you there, it's legal, legitimate, but stupid. But don't underestimate what some people will do, buying a house can throw up the oddest things.

Taking a boiler out is actually pretty easy and if you have another property to put it into, it can save quite a bit of money particularly if it has a good spec. I haven't seen any mention of cash being asked for, maybe I missed it. Assigning an item as contents to avoid paying CGT is perfectly legal, it most certainly is not the same as a seller asking for an off the books cash payment and it would be wrong to suggest it is.

L1011

davo10 wrote: »

Not sure why you are saying there is no legitimate reason for this.

Because there absolutely isn't, that's why.

It is only done to try and reduce tax liabilities or get money seperated from the house value. Trying to add fixtures as 'contents' is pretty damning that its a fiddle.

davo10

L1011 wrote: »

Because there absolutely isn't, that's why.

It is only done to try and reduce tax liabilities or get money seperated from the house value.

How is either of these not legitimate? Are you saying reducing your tax liability by legal means and assigning a value to contents is not legitimate or illegal? What is the basis for your statement?