Sold house tax advice needed

[phil.knowles]

Hello
Ive had a offer on a house, The offer is for £81000 the estate agents have just phoned me wanting to know if 1 can do cashback ? I think this because my buyer doesnt have the 5% deposit . so her mortgage application will say shes paying £83500 so i will be giving her £2500 back This is where im getting confused:confused: As far as CGT is concerned Have i sold the house for £81000 or £83500?

Thanks Phil

[diego]

If you agree to "cashback", then you have agreed to the first sum and given an amount back. It is your choice that you give this amount back, but you will be deemed to have received the larger amount as consideration in any capital gains computation.

[phil.knowles]

Thats what i thought thanks for the quick reply
Phil

[Tax Accountant]

Hello
Ive had a offer on a house, The offer is for £81000 the estate agents have just phoned me wanting to know if 1 can do cashback ? I think this because my buyer doesnt have the 5% deposit . so her mortgage application will say shes paying £83500 so i will be giving her £2500 back This is where im getting confused:confused: As far as CGT is concerned Have i sold the house for £81000 or £83500?

Thanks Phil

Diego replies: ''If you agree to "cashback", then you have agreed to the first sum and given an amount back. It is your choice that you give this amount back, but you will be deemed to have received the larger amount as consideration in any capital gains computation.''

But is the £2,500 repaid at your choice or is this as a consequence of a written undertaking given by you?

From a cursory research of the HMR&C manuals, it appears to me that the true consideration for CGT calculations is £81,000.

Ramnik

[jeffrey]

...and be careful about rules on fraud. There are cases where "cashbacks" are really price reductions concealed from mortgagees; criminal liability can arise under Theft Act 1968 as amended.

[diego]

All

If the documents say £81000 and you receive £81000 then the consideration is £81000. If however you receive £83500 and then give £2500 back, the revenue is likely to argue that you received £83500. If you can convince them otherwise, then good luck, but the revenue's line of argument is likely to follow the reasoning in Coren v Keighley, although the facts of the case are not directly applicable.

When filling in a return, I personally would regard the consideration to be £81000 only if my own documents support this and I only received this amount. Notwithstanding the above, the amount the purchaser claims to be consideration is unlikely to matter.

D

[Tax Accountant]

All

If the documents say £81000 and you receive £81000 then the consideration is £81000. If however you receive £83500 and then give £2500 back, the revenue is likely to argue that you received £83500. If you can convince them otherwise, then good luck, but the revenue's line of argument is likely to follow the reasoning in Coren v Keighley, although the facts of the case are not directly applicable.

When filling in a return, I personally would regard the consideration to be £81000 only if my own documents support this and I only received this amount. Notwithstanding the above, the amount the purchaser claims to be consideration is unlikely to matter.

D

I think it depends on the answer to the question I posed above, ie:

''But is the £2,500 repaid at your choice or is this as a consequence of a written undertaking given by you?''

Ramnik

[phil.knowles]

I will repost when the sale as gone through as im not sure which amount will be on the documents all the estate agent said was that i will still recive £81000 thay also said loads of sales are done like this now as it makes it easier to get a buyer as most cant or dont want to get a 100% morgage.
Thanks Phil

[Chartered Tax Adviser]

If the purchaser is signing a contract to purchase a property for £83500 with no written agreement that you will give them back £2500 then more fool them ! If it is in the agreement you have more chance of HMRC agreeing to the lower figure.














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The above is for the information of readers. Whilst every effort is made to ensure accuracy, information contained may not be comprehensive and recipients should not act upon it without seeking professional advice.
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[Tax Accountant]

I will repost when the sale as gone through as im not sure which amount will be on the documents all the estate agent said was that i will still recive £81000 thay also said loads of sales are done like this now as it makes it easier to get a buyer as most cant or dont want to get a 100% morgage.
Thanks Phil

But you still javen't answered the question posed previously, ie:

''But is the £2,500 repaid at your choice or is this as a consequence of a written undertaking given by you?''

Ramnik