Is this common practice when selling a house?

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?

Valhallapt

AndrewJRenko wrote: »

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

How do you know it’s a pile of sh1te? The property was previously rented, for all we know it was freshly furnished with plans for new tenants before a change of mind brought it to the market.

The sale is clearly listed a property and furnishings.

Perhaps the vendor could list the fridge, dryer, washer, beds, sofas etc on adverts.ie and sell them separately, but they don’t want the hassle so listed the sale as property and furnishings. For most people selling a PPR you wouldn’t bother listing them separately as there is no benefit, but in this scenario that would unfairly disadvantage the vendor.

You are suggesting that if a vendor includes a €1000 fridge in the sale they should pay €330 tax on its sale?

Darc19

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.

As usual you are so wrong on every aspect.

1 - House brochure clearly stated house + contents
2 - €15k does not go far in furnishing a house - I recently put standard furnishings into a 4 bed rental property and it was over 15k
3 - revenue look at what is a reasonable figure. IMO 10k is more reasonable if the furniture and fittings have had a fair bit of wear and tear
4 - How do you know what the furniture is like - you are assuming what it is like. Thankfully Revenue don't use assumptions
5 - Revenue do not come after the buyer. It is the seller that is making the gain. Stop the scaremongering which you parade about in so many of your posts and have been proven time and time and time again to be false

Mad_maxx

AndrewJRenko wrote: »

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

things can change on that front and might well have done since the property went sale agreed ?

of course if its in a very undesirable area , the vendor may indeed have little options , OP best placed to gauge this

AndrewJRenko

Darc19 wrote: »

As usual you are so wrong on every aspect.

1 - House brochure clearly stated house + contents
2 - €15k does not go far in furnishing a house - I recently put standard furnishings into a 4 bed rental property and it was over 15k
3 - revenue look at what is a reasonable figure. IMO 10k is more reasonable if the furniture and fittings have had a fair bit of wear and tear
4 - How do you know what the furniture is like - you are assuming what it is like. Thankfully Revenue don't use assumptions
5 - Revenue do not come after the buyer. It is the seller that is making the gain. Stop the scaremongering which you parade about in so many of your posts and have been proven time and time and time again to be false

The buyer said they were going to dump everything. Did you assume they were going to dump stuff that is really worth 15k?

Revenue will decide who they choose to go after, not you.

AndrewJRenko

AndrewJRenko wrote: »

The buyer said they were going to dump everything. Did you assume they were going to dump stuff that is really worth 15k?

Revenue will decide who they choose to go after, not you.

Different strokes for different folks. Buyers often have their own furniture and/or different taste. Have you ever looked at photos of a property and thought the seller must be blind? that does not however mean the stuff was cheap. Would a Revenue officer be able to accurately value a house full of furniture? Would they care for €15k?

Remember, there is a difference between tax evasion and tax avoidance, one is illegal, the other may not be.

dubrov

AndrewJRenko wrote:

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

Given they held out for 240k, it's very unlikely that they will now accept a reduced offer of 225k.

If someone went sale agreed at 240k with me and without reason downed their bid 225k, I'd be telling them to pay the originally agreed amount or the deal is dead

BTW, big up to the mod that changed the title. Only noticed now.

If the ad says 'house and contents' then I don't see a problem with this anymore. It then becomes tax avoidance rather than tax evasion, imho.

AndrewJRenko

dubrov wrote: »

Given they held out for 240k, it's very unlikely that they will now accept a reduced offer of 225k.

If someone went sale agreed at 240k with me and without reason downed their bid 225k, I'd be telling them to pay the originally agreed amount or the deal is dead

The buyer isn't downing anything. It is the seller that's changing the terms of the originally agreed amount.

AndrewJRenko

Dav010 wrote: »

Different strokes for different folks. Buyers often have their own furniture and/or different taste. Have you ever looked at photos of a property and thought the seller must be blind? that does not however mean the stuff was cheap. Would a Revenue officer be able to accurately value a house full of furniture? Would they care for €15k?

Remember, there is a difference between tax evasion and tax avoidance, one is illegal, the other may not be.

Who knows if Revenue would care. I certainly don't.

I suspect that those who are telling us that Revenue definitely won't care don't know either.

AndrewJRenko

AndrewJRenko wrote: »

Who knows if Revenue would care. I certainly don't.

I suspect that those who are telling us that Revenue definitely won't care don't know either.

Sale listed as house plus contents, seller assigns value to contents which is by no means outlandish as anyone who has had to kit out a house will tell you, yet for some reason you think Revenue are going to send someone round to value the contents, seriously?

By the time Revenue get the details of the sale, someone has looked at the file, decided €15k might be “too high” a value, organises someone to go round and value the stuff, a lot of it will either be firewood, landfill or sold in done deal.

AndrewJRenko

Dav010 wrote: »

Sale listed as house plus contents, seller assigns value to contents which is by no means outlandish as anyone who has had to kit out a house will tell you, yet for some reason you think Revenue are going to send someone round to value the contents, seriously?

By the time Revenue get the details of the sale, someone has looked at the file, decided €15k might be “too high” a value, organises someone to go round and value the stuff, a lot of it will either be firewood, landfill or sold in done deal.

The buyer told us that the price is outlandish.

AndrewJRenko

AndrewJRenko wrote: »

The buyer told us that the price is outlandish.

He/she can dump it all the day the sale completes for the house plus contents he/she agreed to pay €240k for.

Mr. Incognito

I would personally not do it.

Why?

1. Seller is pocketing additional 15k plus 5k saving on cgt.

2. Artificially reduces your house value for remortgage, insurance, mortgage. 15k is a lot if your house burns down.

3. The contents aren't worth 15k unless they have a house full of valuable antique furniture.

Your options are

Tell them if they want to sell for 225 that's fine. You aren't paying for contents.

Put the actual price on the contract.

Your solicitor needs to grow a pair of balls.

Mr. Incognito

Mr. Incognito wrote: »

I would personally not do it.

Why?

1. Seller is pocketing additional 15k plus 5k saving on cgt.

2. Artificially reduces your house value for remortgage, insurance, mortgage. 15k is a lot if your house burns down.

3. The contents aren't worth 15k unless they have a house full of valuable antique furniture.

Your options are

Tell them if they want to sell for 225 that's fine. You aren't paying for contents.

Put the actual price on the contract.

Your solicitor needs to grow a pair of balls.

Seller is not pocketing an additional €15k, the op is paying what he/she bid for the advertised house plus contents.

Remortgage is based on the value of the house at the time you remortgage, not what you paid for it, insurance will only pay rebuild cost, not what you paid and a mortgage is based on the valuation report as submitted by an independent valuer, again, not what you bid for it.

How you know what the value of the furniture and appliances are, is a mystery.

Consider how you value the contents of your house for insurance, some might think it’s worthless rubbish, but to you it has value, and you have to put a value on it.

Mellor

AndrewJRenko wrote: »

The buyer isn't downing anything. It is the seller that's changing the terms of the originally agreed amount.

This is incorrect.
Buyer made an offer for house and furniture. It was accepted.
Buyer now is claim offer was for house only.

Buyer is the one changing the offer after the fact.

AndrewJRenko wrote: »

The buyer told us that the price is outlandish.

Then is onus is on them to counter offer. They have not do so. That's on them.

Mr. Incognito wrote: »

Why?

1. Seller is pocketing additional 15k plus 5k saving on cgt.

2. Artificially reduces your house value for remortgage, insurance, mortgage. 15k is a lot if your house burns down.

3. The contents aren't worth 15k unless they have a house full of valuable antique furniture.

1. No idea how you figure they are pocketing that much ezxtra. 1/3 of 15k is not 20k.
2. This is incorrect. OPs mortgage amount is as agreed with the bank. Ditto insurance
3. If they were valuable anthiques they wouldn't be 15k. If OP didn't like that offer they could have adjusted it.

Your options are

Tell them if they want to sell for 225 that's fine. You aren't paying for contents.

Put the actual price on the contract.

Your solicitor needs to grow a pair of balls.

They already offer 240k for house and contents.
Trying to change this to 225k for house only makes them look extremely foolish. On What planet is that reduction acceptable?

People making 6 figure purchases need to read things like offers and contracts a lot better. Some extreme naivety in this thread.

Claw Hammer

Dav010 wrote: »

a mortgage is based on the valuation report as submitted by an independent valuer, again, not what you bid for it.

.

A mortgage will be based on the lower of the valuation report or the vprice paid.
The valuer will be given the price offered and asked if it is worth that amount at least. The valuer does not come cold to the house and value it based on a hypothetical sale in ignorance of the actrual bid.

godtabh

SurplusToys wrote: »

I need to speak to my solicitor next week but he has concerns that changing the price on the title deeds might affect my loan offer from the bank.

There is furniture in the house and we told that it would be left there.
No mention of 15k was ever mentioned.
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.

I'm not sure if it's too late to pull out.
I do like the house but this (what seems like intentional deceit) has made me pretty angry to the point where I want to tell them to eff off

Your loan offer will have to be updated. We had to do that at the end of last year when we negotiated the price down when we factored work in. Delayed the sale by 4 weeks as it took the bank that long to re issue their loan offer

AndrewJRenko

godtabh wrote: »

Your loan offer will have to be updated. We had to do that at the end of last year when we negotiated the price down when we factored work in. Delayed the sale by 4 weeks as it took the bank that long to re issue their loan offer

Why would the buyer accept a four week delay in their purchase? That will probably be costing them a couple of grand in rent on their existing home.

SurplusToys

OP here!

I've learned a lot from reading all of the posts here, lots of really interesting points of view.

What I understand to be a matter of fact now is that there was no wrong doing on the part of either the EA or the vendor.
The seller had a legal opportunity to save some cash in CGT and pursued that opportunity.

(That said, I feel the play was greedy but that's a subjective opinion that doesn't carry any legal weight. )

In my particular instance the seller conceded that deducting the cost of furnishings from the sale price was not what was originally agreed to and there will be no mention of it in deeds, contracts or anything else.

I am relieved.

SurplusToys

AndrewJRenko wrote: »

Why would the buyer accept a four week delay in their purchase? That will probably be costing them a couple of grand in rent on their existing home.

Maybe they weren't getting any rent at all due to covid and people opting to return to their family homes?

maestroamado

SurplusToys wrote: »

OP here!

I've learned a lot from reading all of the posts here, lots of really interesting points of view.

What I understand to be a matter of fact now is that there was no wrong doing on the part of either the EA or the vendor.
The seller had a legal opportunity to save some cash in CGT and pursued that opportunity.

(That said, I feel the play was greedy but that's a subjective opinion that doesn't carry any legal weight. )

In my particular instance the seller conceded that deducting the cost of furnishings from the sale price was not what was originally agreed to and there will be no mention of it in deeds, contracts or anything else.

I am relieved.

All is well that ends well and the most important thing is your happy.
The up-side for you is that house prices are going up by the day around here anyway.
You did not at any time say what deposit you paid. The reason i say is deposit 10% and 90% left to be paid.
So if deposit €24k the house €240k etc, the other thing was a side-show that should have sorted without any stress for you.
I would have my doubts about your solicitor but most of them are pretty dodgy anyway,
The important thing is your happy with the outcome...

Caranica

SurplusToys wrote: »

In my particular instance the seller conceded that deducting the cost of furnishings from the sale price was not what was originally agreed to and there will be no mention of it in deeds, contracts or anything else.

I am relieved.

Are you still paying 240k? Or 225?

Bob the Seducer

Caranica wrote: »

Are you still paying 240k? Or 225?

I'd assume the OP is still paying 240k for the house & contents as agreed, it'll then be up to the seller to declare their income from the sale and split it whatever way they see fit.

As the house was only offered for sale with contents, I'd say the seller may have received advice that defining separate values for the two in the contract after the fact might not wash (and might impact the buyer's mortgage).


Best of luck with the new house OP, I'd say you'll be glad once its all done and dusted.