ᐅ Property Sale – Separating Fixtures and Fittings from the Residence?
Created on: 17 Jun 2020 21:18
T
Tarnari
Hello everyone,
First of all, I wasn’t sure which section of the forum to post this in, as to my knowledge there isn’t one specifically for discussing not only purchase questions but also questions about selling.
Background:
We are going to sell our current single-family home.
A potential buyer has been found.
In addition to the kitchen, there are several high-quality built-ins, lighting fixtures, etc., that the buyer also wants to purchase.
The buyer is offering amount X. We agree with this amount and want to finalize the deal.
Now, understandably, the buyer wants to reduce the property transfer tax by excluding the movable inventory from the purchase price of the property and handling it through a second, separate sales contract.
From our point of view, this isn’t necessarily required because the inventory can be itemized with costs within the main purchase contract, and the buyer would then only pay tax on the total property price minus the inventory.
We suspect that the buyer is concerned, on the one hand, that including the movable inventory in the purchase agreement will increase the notary fees payable by them, and on the other hand, that the tax office might later question the price assigned to the inventory, which could have a negative outcome for the buyer.
This is all understandable.
The question we have:
Assuming we agree to carry out a property sale with the offer amount minus the inventory and sell the inventory separately under a second contract for the remaining amount…
What consequences for us might this have that are not immediately obvious?
We have this worst-case scenario in mind where the buyer ends up with the house based on the valid notarized contract but doesn’t pay for the furniture, and in the worst case, we might have to go through a civil court dispute to recover the money for the furniture.
I hope I was able to explain the situation clearly enough.
First of all, I wasn’t sure which section of the forum to post this in, as to my knowledge there isn’t one specifically for discussing not only purchase questions but also questions about selling.
Background:
We are going to sell our current single-family home.
A potential buyer has been found.
In addition to the kitchen, there are several high-quality built-ins, lighting fixtures, etc., that the buyer also wants to purchase.
The buyer is offering amount X. We agree with this amount and want to finalize the deal.
Now, understandably, the buyer wants to reduce the property transfer tax by excluding the movable inventory from the purchase price of the property and handling it through a second, separate sales contract.
From our point of view, this isn’t necessarily required because the inventory can be itemized with costs within the main purchase contract, and the buyer would then only pay tax on the total property price minus the inventory.
We suspect that the buyer is concerned, on the one hand, that including the movable inventory in the purchase agreement will increase the notary fees payable by them, and on the other hand, that the tax office might later question the price assigned to the inventory, which could have a negative outcome for the buyer.
This is all understandable.
The question we have:
Assuming we agree to carry out a property sale with the offer amount minus the inventory and sell the inventory separately under a second contract for the remaining amount…
What consequences for us might this have that are not immediately obvious?
We have this worst-case scenario in mind where the buyer ends up with the house based on the valid notarized contract but doesn’t pay for the furniture, and in the worst case, we might have to go through a civil court dispute to recover the money for the furniture.
I hope I was able to explain the situation clearly enough.
Hello, we faced the exact same situation three years ago. Our buyer also asked us for a separate contract for the inventory. We were uneasy about it as well... What if the buyer simply doesn’t pay? So, we had to place a certain amount of trust in the process. I included in the secondary contract, as a formality, that the house key would only be handed over after payment for the inventory. I have no idea if that would have held up legally. But everything went smoothly, and the buyer paid without any issues. The buyer also takes on some risk here... If the main house contract falls through, I could insist on the second (legally binding) contract, meaning he can keep the old furniture if he wants.
N
nordanney17 Jun 2020 22:57Make a contract. It is still common practice today to include the sold inventory in the purchase price of the apartment/house with a stated value.
I am currently doing this myself in two purchase contracts for apartments/houses.
There is no real reason to draw up a second purchase contract. Only disadvantages, which have already been mentioned.
I am currently doing this myself in two purchase contracts for apartments/houses.
There is no real reason to draw up a second purchase contract. Only disadvantages, which have already been mentioned.
P
pagoni202017 Jun 2020 22:58Steffi33 schrieb:
Hello, three years ago we faced exactly the same situation. Our buyer also asked us for a separate contract for the inventory. We had our doubts about it… What if the buyer simply doesn’t pay?? So, we had to place a certain amount of trust here. I wrote into the second contract, pro forma, that the house key would only be handed over after payment for the inventory. No idea if that would have been legally binding. But everything worked out fine; the buyer paid without any issues. The buyer also takes a certain risk… If the main house contract doesn’t go through, I could also insist on the second (legally valid) contract… meaning: he can keep the old furnishings if he wants. I had exactly the same experience. I actually sold all the inventory because the apartment had been used as a holiday rental. This reduces notary fees and especially property transfer tax. This was openly discussed during the notary appointment, and the notary said you could easily allocate about 5%. This was then included and handled exactly that way in the sales contract. No problems at all; for the notary, this is standard procedure. What I hadn’t considered back then was that I had to declare this sold inventory as income for the holiday rental (silly me), and later I had to pay taxes on this sales revenue partly. But if this is purely private, the notary handles it directly and without problem. I don’t want any complications with the buyer now. Just do it directly through the notary and that’s it.
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nordanney17 Jun 2020 23:35Buyers should keep one thing in mind. While including the furniture lowers the purchase price and thus the property transfer tax, it also reduces the mortgage lending value of the property. This can become a challenge during financing, especially if you have limited equity and want to reduce the pure property price at the same time.
Tarnari schrieb:
Assuming we agree to conduct a property sale with an offer amount minus inventory This is quite common, especially with the kitchen. Just list it as a separate item in the contract.
Tarnari schrieb:
to sell the inventory in a separate contract for the remaining amount.... That’s nonsense... do you sell used items on eBay Kleinanzeigen with a contract? A handshake is enough.
Tarnari schrieb:
What consequences, not immediately obvious to us, does this have? None Tarnari schrieb:
How can we prevent the buyer from backing out if we become too inconvenient from their point of view? No homebuyer stops a purchase over a lamp or curtain...
We are talking about a mid five-figure amount and a buyer who is being ripped off.
We would prefer not to handle this with just a “handshake.”
Is it possible, for example, to include the payment for the inventory in a second contract within the notarized agreement, without affecting his taxes and notary fees?
We would prefer not to handle this with just a “handshake.”
Is it possible, for example, to include the payment for the inventory in a second contract within the notarized agreement, without affecting his taxes and notary fees?