Manipulating mortgage value to avoid stamp..?

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sp@rtacus

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Hi

The vendor of a property that a friend of mine (honestly) is looking at has offered to drop the sale price below the stamp duty threshold if the balance was paid in cash. He is currenlty mortgage approved up to and above the original valuation. Can he drawdown the original valuation amount, lets say 375k, sign contracts at say 315k therefore avoiding SD and pay the remaining 60k in cash to the vendor?

I realise the ethical implications of this, but just wondered if it is feasible/possible.

All advise/comments/criticsim welcome.

Thanks in advance.
 

Ignoring ethics, it is illegal, and the bank and solicitor will have nothing to do with it.
 
Highly illegal - this practice may well happen, but Revenue are likely to investigate 'suspicious' close-to-SD-threshold transactions in the future and catch your friend. It would be further flagged for investigation since it is being 'sold' below market value.

Also, the bank will not let you draw down part of your mortgage as cash.
 
Can he drawdown the original valuation amount, lets say 375k, sign contracts at say 315k therefore avoiding SD and pay the remaining 60k in cash to the vendor?


Apart from all the other issues, Bank will not be lending over 100% and the loan offer that does issue will show (a) contract/purchase price and (b) amount of mortgage which will be a percentage of the actual, contract price. If there is a discrepancy between the figures on the loan offer ( i.e. contract price is lower than mortgage), the solicitor will be duty bound to deal with the issue.

It really is a complete non starter when people are borrowing to buy.

mf
 
Can he drawdown the original valuation amount, lets say 375k, sign contracts at say 315k therefore avoiding SD and pay the remaining 60k in cash to the vendor?
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Although, in no way advocating defrauding the Revenue of any monies due to them - your friend could 'buy' carpets, solid wooden flooring, curtains, light fittings,kitchen appliances, shed, etc. as extras. That way they would not be included in the price of the property for the purposes of stamp duty.

Obviously the estate agents or brief involved would not be impressed if it came to light as it would also reduce their fees!!

I'd advise your friend to tread carefully - would his mortgage protection cover him for the full amount of the mortgage or only the portion spent on the property - could turn round and bite him in the ass, if not thought thru.
 
ACA - this is also illegal, and I'm not sure that any amount of carpets and flooring would come to 60k!
 
origanlly posted by sun sparks
this is also illegal, and I'm not sure that any amount of carpets and flooring would come to 60k!
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I totally agree with you sun sparks - I was just trying to answer the original thread, thought that was apparent by my closing comment!
 
The contents @ 60k (or at whatever k) will not serve reduce the S.D. rate, only the amount on which the rate applies.

If any underhand dealings take place, it will be outside of the radar of solicitor, bank etc. so, no, your friend will not be able to use the banks money for this purpose. It will need to come out of his back pocket. And that carries its own risk for both parties because the solicitors are not acting as trusted intermediaries for the undercounter money.

Be afraid, be very afraid.
 
As previous posters have said this is illegal, but what you asked was if it would be possible to have the contract price at 315k and the mortgage for 375k - NO. The mortgage will be based on the contract price. If your friend does decide to go down this route then they will need to come up with the money somewhere else.
 

If it was say 5k or 10k you could possibly AVOID the cost due to the cost of the contents being dealt with seperatly, however, this is evasion and illegal
 
CCOVICH said:
Ignoring ethics, it is illegal, and the bank and solicitor will have nothing to do with it.
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Come on now, this is Ireland - banks and solicitors have on many occassions on the past been party to illegal activities......
 
Markjbloggs said:
Come on now, this is Ireland - banks and solicitors have on many occassions on the past been party to illegal activities......
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that still doesnt make it legal! plus I believe the Ireland of today is not the Ireland of the 1970's or 80's.
 
this is Ireland - banks and solicitors have on many occassions on the past been party to illegal activities......
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Can you name a country with a clear corporate conscience?
 
propertyprof said:
that still doesnt make it legal! plus I believe the Ireland of today is not the Ireland of the 1970's or 80's.
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Judging by the OP's original question, I'd say not.Anyway, who's been to jail for all those crimes of the past?
 
Ok-the point has been made (and made on AAM several times before)-what the OP has proposed is illegal, and almost certainly not feasible.

If there are wider issues that people wish to discuss, please do so in Letting Off Steam.

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