Chattels and SDLT

[Mendi]

Have got an offer on my house which, for understandable reasons given the price bracket, is at £250k which is lower than I wanted. Have another offer at £265k on hold as that buyer lost their buyer. Need to sell so trying to be sensible.

I asked my EA if they could go back to the £250k offer and ask if they'd be prepared to offer a couple of grand for chattels, which, given that I've got nice curtains, curtain poles, light fittings, a garden shed, dishwasher, freezer, washing machine, is not an unrealistic amount.

EA flatly refused and said it would be tax fraud. I thought that was very odd, as I paid £2k for chattels (different ones!) when I moved in. And I'm pretty sure (dusty memories from law school) that all of those items are properly defined as chattels.

Not quite sure what to do about this! Who is right?

When you complete the fixtures and fittings list, offer the chattels for sale.

EA is right in that it could be investigated for Stamp Duty avoidance. You either want them to up the offer or not. Your choice whether to leave items or negotiate later.

But it's not SDLT avoidance if I am actually leaving the items there!

Is it a problem if I make it a condition of the sale that the buyer buy the chattels?

yes I think it probably is.

If you sell a house for £250K the buyer pays 1% SDLT but if you sell it for £252K they pay 3% as it's over the £250K threshold. So if you ask for £250K + £2k for chattels, it looks like an attempt to avoid tax.

Probably the last time you bought a house, SDLT didn't exist or the purchase price wasn't close to a threshold.

Personally I don't understand why buyers or sellers would want a separate price for things like curtains. Why not either take them or leave them and work out the selling price accordingly. Would you really take curtain poles and a garden shed?

I bought for £250! And paid £2k for fixtures and fittings. People do this precisely because they don't want to go over the threshold and because SDLT is not payable on chattels and the rules allow the seller to sell chattels for a fair price. So £1k for a washing machine would be tax avoidance but £200 would not.

I have friends who've moved into houses where the vendors have taken not just the curtain poles but even taken up the carpets, so yes, people do do that.

You can't just say that you want £2k. You have to itemise everything, agree a 'just and reasonable' price with the buyer and see what the total comes out as. Unless your light fittings, curtains etc are amazing I doubt you will get £2k for what you have listed.

We looked at doing this recently, but in the end our vendor only wanted to leave a couple of pieces of furniture so we are only paying her about £300 on top of the £250k.

The problem is, realistically you are trying to avoid Stamp Duty Tax. And the HMRC only have to prove you over estimated the price of one item by £1 and they gain £5k or whatever it is.

HMRC are (apparently) much more likely to investigate now and much stricter that in the past.

My garden shed alone cost £500, I have itemised the other items and £2k is a fair price.

I'm not trying to avoid SDLT, that's the buyer's concern. I just want more money.

I'm afraid hmrc really crack down on this now - despite it being pretty commonplace a few years ago. Although it isn't you who is trying to avoid stld, that is the reason a buyer won't pay more, so if you want more for it then you'll have to wait it out and then hmrc get their money. Which is all they care about.

We're currently buying a place for £258k... So you might get lucky and find someone as stupid like that!

Your estate agent won't but your solicitor can in the contence thing you fill in. The buyer can say no, knowing you are unlikely to take everything with you. We paid some extra money for bits of furniture when we bought at 250 we paid an extra 1k but the furniture was worth that.

When I moved in 1998, the solicitors listed what was included - carpets curtains and rails, free standing fridge/freezer , pond pump, all fitted wardrobes including free standing bedside cabinets, ceiling lights bulbs and shades.
Did I pay stamp duty on those things as well?

Mendi, at first I thought you were wrong, but I have now checked, and in fact I think you are right! Carpets, curtains, white goods ans some white goods are 'chattels', and SDLT is not due on them. £2k doesn't sound like an excessive amount for the items you list, but you have to be able to demonstrate the amount charged for chattels is reasonable.

Here is the relevant HMRC website info .

I've never thought of fixture and fittings as a way of making a bit more money - I guess because if I offered my washing machine etc I'd have to buy a new one which would be twice the price if a second hand one. But if you don't want or need the stuff I guess it saves you the hassle of selling it while you're trying to move.

I'm a bit confused too. My solicitor said that the sale of the chattels can either happen through the conveyancing or privately between buyer and vendor. So, if the vendor initially doesn't offer the items for sale on the questionnaire but later agrees a price for chattels privately with the buyer, how on earth will HMRC find out?

I don't think it is so much the definition of chattels that are causing the issue , it is the fact that presumably previous offers may have already assumed some included so effectively you want EA to ask them to up the basic offer by 2k, but not pay additional SD. Had you just said we can't accept 250 then EA may have obliged, but you muddied the water by putting conditions on that and raised suspicion. Such things are normally negotiated after the offer is accepted.

That's true LIZS. I also think that anything that has been listed in the original sale/marketing materials/Rightmove spec etc is considered part of the house sale.

As a buyer I would never assume that any curtains, blinds etc were included in the sale price. I would always expect these to be priced as fixtures and fittings.

However, I certainly don't want to do any remotely dodgy deal so have decided I'm going to go back and say to this one I will not sell below £260k.