Q Our offer of £250,000 to buy a house has been accepted, but it has emerged that the seller wants to sell the property for £245,000 and for us to pay (the remaining) £5,000 to cover the agent’s commission. I believe this is all above board, but we would rather buy the house for £250,000 with a cash deposit of 10% and a mortgage of £225,000 than use some of our cash to pay part of the selling price to the agent.
We feel slightly coerced into this odd situation and don’t know of anyone who has encountered anything similar. Our question is whether there is a strong legal argument that would favour buying at £250,000 (to let the seller pay the commission fee himself). When asked as to why the seller favours this slightly complicated financial construction we were told that he would rather not pay the capital gains tax on the £5,000 extra that he could have made with the sale of his house. RB
A There is a strong argument in favour of keeping your cash for the deposit on the house, as the size of deposit you can put down affects how much you can borrow on the mortgage.
You might be able to persuade the seller to accept the full amount of the purchase price by telling him that his capital gains tax worry is unfounded because when calculating his gain, he can deduct the commission he pays to the agent. So having you pay the agent’s fees makes no difference to his tax position. If the house has been his home for all the time he’s owned it, capital gains tax isn’t payable anyway – as you might want to point out.
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