Stamp Duty on Second hand Homes

G

GY01

Guest
I am looking at buying a second hand home..the asking price is 336500 and the house is fully furnished with all contents being included in the sale. I am a first time buyer and so stamp duty at 3% becomes due. However because the contents are being included the value of the house is not infact over the limit of 317500. How do i go about drawing up contracts etc in order to reflect this and thus not become liable for stamp duty?
 
There are several existing threads on this sort of strategy that might be worth searching for. If I recall correctly this sort of approach to splitting the contracts is at best questionable and at worst simply irrelevant (because the SD will be calculated on the cumulative amount anyway) or illegal. Probably best to ask your solicitor for an opinion assuming that they are familiar with the tax issues.
 
You are liable for stamp since the value of the transaction is over 317.5, but are only liable for the proportion which reflects the value of the property and not the contents (315 @ 3%?). Revenue are well aware of this route at attempting to avoid stamp duty payments.

The market for 2nd hand furntiure in Ireland is virtually nill, so attempting to apply a value of 10s of thousands is a pretty obvious tax evasion measure.
 
I'd suggest that you should be very careful claiming that the second hand contents of a home are worth over €19'000.

Unless you're looking at a house with some extremely expensive furnishings, I'm not sure that Revenue would believe that the contents are worth that high a figure (it's the cost of the contents you're buying, not the cost of replacing them with new items should you not purchase them).

Then again, depending on the property in question, it may be possible, just warning it may flag some attention with Revenue.

If I were going that route I'd detail the contents extremely well, note the quality/condition/age/etc, everything you can, to justify how the figure was calculated.
 
Thanks for the advice, i'll get my solicitor on the case..great web site!
 
If the buyer agreed and the contents were actually worth that sort of amount itwould be perfectly legal and straighforward.

However, the net realisable value of second hand furniture isn't very much so you'd be leaving yourself open to some Revenue rippage by trying to be too cute here.
 
Its important to realise the framework within which the value of contents of a residential property being bought may alter the stamp duty threshold.

Take an example

House is E475K Contents are E5K. Total contract is E480K. Stamp duty is payable on E475K. No problem. No issues arise. No stamp duty threshold at issue.

Another example:

House is E380K. Contents are E5K. Total contract is E385K. This breaks through a stamp duty threshold. Stamp duty is payable on the E380K but at the rate applicable on E385K.

This is the Revenue certificate in the Deed:

IT IS ALSO HEREBY CERTIFIED that the consideration (other than rent) for the sale 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 €THRESHOLD

You can see the reason why people want to buy contents separately in the second scenario - but Revenue know that this happens and they make it deliberately difficult.

So what do you do? As a practising solicitor, my advice is bite the bullet. More often than not its a total red herring - the property is in the higher price range anyway and stamp duty is payable at the higher rate. I've yet to see a house in the average bracket ( i.e. below E635K when 9% kicks in automatically) where the contents could realistically be said to have a value of more than 2-4K.

Separate contracts don't work - because of the Revenue certificate. And because a Court will not uphold an illegal contract so if it all goes wrong a Court won't help you.

Solicitors and auctioneers should not facilitate this - its a fraud on the Revenue and exposes both to Revenue wrath. It also feeds the average Irish consumer frenzy/mindset of (a) "putting one over on Revenue" - Daw! and (b) resolutely refusing to make themselves properly advised of their own taxation obligations and taking responsibility for their own actions.

And finally, REVENUE ARE NOT STUPID and Stamp Duty is a self assessment tax. They have more access to actual prices being paid than any one else - so it only takes a quick comparison with another similar house for Revenue to "pull" a Deed that is understating the price,send it to their own Valuation Office before fixing a proper valuation and hitting you with penalties and interest.

Altogether just not worth it.

mf

mf
 
Good post mf1 - summarises the issues and reality of the situation quite clearly. Perhaps a potential sticky/key post for the next time sombody asks this regular question?
 
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