Avoiding stamp duty on contents

Gav2 said:
So are we talknging about tax evasion or tax avoidence? 1 legal.
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I would venture looking at a house which is on the market at X and then subtracting the value of shelves and wooden floors would be tax evasion, completely dodgy and result in the Revenue coming down like a ton of bricks.
 
KalEl said:
I would venture looking at a house which is on the market at X and then subtracting the value of shelves and wooden floors would be tax evasion, completely dodgy and result in the Revenue coming down like a ton of bricks.
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What if a third party buys the bits and peices?
 
Gav2 said:
What if a third party buys the bits and peices?
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As I said earlier it's manufacturing a complete spoof to evade paying tax...whatever about the practicalities of being caught it's morally wrong.
 
noilheart said:
As far as I know Revenue would not allow you to deduct the value of the wooden flooring and tiling - only contents which the vendors wish to sell to you and which they could take away if you did not want to buy. The vendors are not going to rip out wooden flooring, tiling and bathroom fittings if you decided not to buy them - they come as an integral part of the house and are not contents. But try anyway and negotiate the best amount you can to deduct from the chargeable amount.
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That is clearly not the case from the revenus guide, check out revenue.ie leaflets and guides - stamp duty - Guide to instruments executed on or after Jan 2002. Carpets are not removable, no more than decking garden sheds or wooden flooring, yet are allowable.

Clubman you have argued for this also, what is your logic?
 
Take it straight to the revenue and tell us how you get on. It just takes a phonecall (to the right person).
 
KalEl said:
I mean, say I was buying a house from you for €380,000.
I see a really nice table in the house and offer you €2,000 for it which you accept. Surely there's no potential stamp duty issue here?
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I am afraid there is. By law, you would need to declare the sale of any contents to the revenue. This would make the total transaction for house + contents €382k pushing you into a higher stamp duty bracket. This higher rate would be charged on the lower amount i.e. 6%/7.5% on €380k.

Of course, you could decide not to inform the revenue that you bought the table and they may never know but it is definitely illegal.
 
On the original question and judging by the Revenue literature, the OP is 100% correct, all the items listed can be viewed as a seperate transaction and so reduce their stamp duty bill. Where I believe the OP is mistaken is in the values attached to the items. Whilst I'm sure each of these items did originally cost a fair amount of money and it's true that you can agree whatever fee you wish when creating a private transaction, Revenue will more than likely view this as an artificial transaction created solely to reduce a tax liability. Which it obvously is. What would be the market value of a 2nd hand carpet cut to the dimensions of a particular house? Tiles chiselled off a wall? Any electrical equipment? Check out FreeCycle.com or DublinWaste.ie to find out.

The key part of the Revenue literature is
not included in the legal document
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Ordinarily legal contracts would be written so that all the articles named by the OP would be included, not deliberately excluded. We all know of cases where people turn up at their new house only to find it stripped of all the fittings, including lightbulbs, because they didn't ensure this was in the contract.

All that's really being achieved here is extra work for the solicitor in drawing a seperate contract (and presumabily a higher bill). I would imagine this is a scenario that has been suggested by the vendor or agent in order to entice the buyer, make them feel like their getting a bargain. If you want to have 1K more in your pocket offer 1K less on the asking price.

In the long run you may not be saving yourself anything. If at some point in the future this prperty became an investment property and so liable for CGT on it's eventual sale you would have to calculate your taxable profit on the lower amount you're paying. As a result you'd face a 20% CGT bill on the amount you'd paid for the contents. So save 3% short term, pay 20% long term.
 
Howitzer said:
On the original question and judging by the Revenue literature, the OP is 100% correct, all the items listed can be viewed as a seperate transaction and so reduce their stamp duty bill.
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This holds true as long as the OP calculates the SD band that applies as house and contents i.e. the OP cannot use this as an artificial construct to bring the house into a lower SD bracket. This will be illegal even if the revenue accepts the values indicated are fair.

Howitzer said:
All that's really being achieved here is extra work for the solicitor in drawing a seperate contract (and presumabily a higher bill).
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I am sure it can be drawn up as a single contract. When I bought my house the contents were listed on the contract along with their value. The SD band was calculated based on the total value but the rate was only applied to the house. There is no need for a separate contract.
 
room305 said:
This holds true as long as the OP calculates the SD band that applies as house and contents i.e. the OP cannot use this as an artificial construct to bring the house into a lower SD bracket. This will be illegal even if the revenue accepts the values indicated are fair.
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True. I had assumed this went without saying as it has been discussed ad nauseum. The saving is that these items aren't taxed (@3% or whatever band the entire transaction falls into)
 
It is not tax evasion - it is making sure that you pay stamp duty on the house and its permanent fixtures and fittings. You are not evading tax by pointing out to the tax man that there is €x amount of contents that are coming with the house. In practice you are only saving between €500 - €1500 on your bill.

I couldn't see the Revenue jumping up and down unless you have a huge amount for contents.
 
Howitzer said:
On the original question and judging by the Revenue literature, the OP is 100% correct, all the items listed can be viewed as a seperate transaction and so reduce their stamp duty bill. Where I believe the OP is mistaken is in the values attached to the items. Whilst I'm sure each of these items did originally cost a fair amount of money and it's true that you can agree whatever fee you wish when creating a private transaction, Revenue will more than likely view this as an artificial transaction created solely to reduce a tax liability. Which it obvously is. What would be the market value of a 2nd hand carpet cut to the dimensions of a particular house? Tiles chiselled off a wall? Any electrical equipment? Check out FreeCycle.com or DublinWaste.ie to find out.

The key part of the Revenue literature is

Ordinarily legal contracts would be written so that all the articles named by the OP would be included, not deliberately excluded. We all know of cases where people turn up at their new house only to find it stripped of all the fittings, including lightbulbs, because they didn't ensure this was in the contract.

All that's really being achieved here is extra work for the solicitor in drawing a seperate contract (and presumabily a higher bill). I would imagine this is a scenario that has been suggested by the vendor or agent in order to entice the buyer, make them feel like their getting a bargain. If you want to have 1K more in your pocket offer 1K less on the asking price.

In the long run you may not be saving yourself anything. If at some point in the future this prperty became an investment property and so liable for CGT on it's eventual sale you would have to calculate your taxable profit on the lower amount you're paying. As a result you'd face a 20% CGT bill on the amount you'd paid for the contents. So save 3% short term, pay 20% long term.
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I would agree that the contents are not valued now at their original value, so may propose to reduce their value by 20% per year (40% in total). Cheers
 
Even if it is not illegal evasion it could be disallowed avoidance - not all avoidance measures are legal and a transaction artificially structured purely to avoid tax will most likely fall foul of Revenue's anti-avoidance rules. Whether any specific case is legitimate or not is really a matter for the individual and their professional tax advisors.
 
badabing said:
I'm just about to buy a house with a certain amount of contents. The solicitor wants the EA to write out the inventory with a value to submit to the revenue so I won'r have to pay stamp duty on it. The EA says the value is only small, but by my estimation it is sizeable, totalling to circa 15k (below). Does my estimate look reaslitic? (This is all quality stuff, the place is finished to the last word)

Fridge/ freezer; €500
Built in dishwasher; €400
Oven + hob; €900
Table and 6 chairs; €600
Double bed; €400
Bathroom fittings in en suite; €300
Bathroom fittings in main bathroom; €300
Bathroom fittings in downstairs toilet; €200
Garden shed; €1200
Additional partition fencing in back garden (dog's area); €400
Blinds / curtains to fit 8 # windows / patio doors; €2,500
Shelving; €300
External decking; €2,500
Brass finish light switches / dimmers; €600
Flush mounted lights / special light fittings; €800
Wooden flooring / tiling in kitchen + bathrooms / carpets; €4,500
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I cant believe most of the above arent considered part of fixtures and fittings. How about contacting the IAVI (auctioneers institute and ask their opinion? I dont think the vendors really want these items how bout droping the price or telling them you dont want them and call their bluff?

Clubmans comments noted, but nothing wrong with parents supporting their children?
 
im have just rented out my apartment, i bought it initially as an owner occupier but plans have changed. the cost of the apartment was 256000,

will i have to pay 5% of this amount as clawback

or will i have to pay 5% of this amount minus VAT as i read somewhere on the forum

thanks
 
OP - I think the price you valued the items at is reasonable. And there is nothing wrong with trying to reduce your tax liabilities.

In the past it was quite common for people to take the carpets, curtains and light fittings with them particular if they were valuable. Nowadays in your normal semi D most people wouldn't be bothered to remove them if selling. Here in Belgium they take the wooden flooring, curtain rails and all light fittings even leaving just a wire with no bulb. I know one case in Ireland where the sellers took the sockets off the walls and all the bathroom fittings.
 
Guys Id like to settle this 'once and for all'

Firstly i'd like to say that badabing is correct in principle when he says that Stamp Duty is not payable on 'contents' of a house. This is not in dispute.

However Badabing is incorrect in listing many of the items which are not defined as contents but are instead fixtures and fittings of the house and are included in the sale price upon which stamp duty is payable.

As a general rule of thumb a fixture and fitting is anything that is physically attached to the building. These are well defined legal concepts.

For example.

Fridge Freezer - If it is free standing it is considered contents / it it is integrated into the kitchen it could be a fixture/fitting. ditto regarding the dishwasher.

Integrated Hobs and Ovens are considered a fixture and fitting of the house and are not considered contents. They cannot be seperated out from the price of the house to achieved a lower figure for Stamp Duty purposes.

Table and Chairs - Contents.
Double Bed - Contents.
Bathrooms Fittings - Fixture and Fittings
Garden Shed - Fixture and Fittings
Fencing - Fittings
Blinds + Curtains - Contents
Shelving - Fixture+Fitting
External Decking - Fixture and Fittings
Light Fittings - Fixture and Fittings
Wooden Flooring/tiling - Fixture and Fittings
Carpets - Contents


To conclude, as you can see from above, the majority of the items listed by Badabing are legally considered fixtures and fittings and may not be 'separated out' from the purchase price of the house in order to achieve a lower price for Stamp Duty purposes.

As a general rule of thumb a good guide is to ask yourself 'if I was moving house would i take the items with me' if the answer is yes the item is usually contents if the answer is no the item is usually a fixture.

To illustrate this point, no-one would ever consider taking bathroom fittings (wc and sink) with them when they moved house, neither would anyone consider taking light dimmer switchs off the wall and take them with them. Nor would anyone rip up garden fencing or wooden flooring to take with them - these are obvious example.

One further error that Badabing has made is that Revenue will require that the values attributed to the items are realistic and represent the current 'second hand' value of the items.

Finally, I would imagine that there is no more than 2-3K worth of value in badabings contents - and that is being generous.
 
Sign, of course they didn't expect the sockets to be taken off the walls, who would expect that, but it did happen. I'm sure many people on AAM who have bought second hand houses can tell you the same. I'm sure lots of people who assumed that that the built in hob/fridge freezer was included and arrived to find an empty kitchen etc. Maybe I'm wrong and in our throw away society people just leave these things behind nowadays.

Re prices I know I can buy a cooker in the cheapo store for 200 Euro but I also know that at home I have a well known name Smeg which costs 1000 and that's just an oven. You can buy ready made curtains from Roaches/Dunnes etc for 100 Euro but equally you can have curtains made to measure for 2000 Euro a pair. You can buy your flat pack table and chairs for little or nothing or you can have it custom made. The OP said it was quality stuff.

If I had let's say a Georgian mansion with antique light fittings and I was selling the house - they would not automatically be included in the sale price no matter what the rest of you hear think. I would of course make it explicitly clear to potential buyers that such items were not included. In fact in some houses that contents/fixtures and fittings could amount to a very substantial amount. I'm not referring to tiles on the floor when I'm making this point. The OP has to clarify for himself what is ok to disallow for stamp duty purposes but I don't think it is as clear cut as everybody here makes out.
 
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