RLA : RPI : Fitting way to avoid stamp duty penalty

News from the Residential Property Investor, the bi-monthly magazine for RLA members

other artilces from the February / March 2002 issue

Fitting way to avoid stamp duty penalty - February / March 2002

Investors who buy houses inclusive of furniture and fittings have been reminded not to overlook the possibility of apportioning the purchase price accordingly. It could make all the difference between paying at one rate of stamp duty and the next, advises Manchester accountant Colin Tice.

'The Inland Revenue accepts that a "small percentage" of house sale proceeds can be attributed to chattels, or fixtures, which is particularly useful if the house sale price is around the £250,000 or £500,000 thresholds', said Tice, a tax partner in Cassons.

Stamp duty increases in jumps according to the price of the property. But once a threshold has been breached the higher rate applies to the total price.

Rates are currently nil for properties of up to £60,000, 1 per cent for those selling between for more than £60,000 but no more than £250,000, 3 per cent for those between this figure and £500,000, and 4 per cent for those changing hands at more than £500,000. Which means that even a £10 difference at or near the thresholds can mean paying as much as £20,000 more in stamp duty.

'An easy way to mitigate part of this tax is to agree with the vendor to allocate some of the price to items that are not liable to stamp duty', said Tice.

However, the Inland Revenue is alert to 'artificial apportionments'. And 'not all fixtures qualify as chattels. Some are usually treated as part of the house for example fitted kitchens and bathrooms. Items which will usually be accepted include carpets, curtains and freestanding white goods', he advised.

other artilces from the February / March 2002 issue

RPI news archive