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.
nordanney schrieb:
For a mid five-figure amount, we are talking about costs of 75–100 € (about 80–110 USD). So, he basically saves nothing in relation to the total costs.Well, it’s a bit more than that. Depending on the state, property tax on 10,000 € (about 11,000 USD) amounts to between 350 and 650 € (about 380–710 USD). And for me, a mid five-figure amount is more than just 10,000 € (about 11,000 USD).N
nordanney18 Jun 2020 08:06Oetti schrieb:
Well, it is a bit more. Depending on the federal state, property tax for 10,000 Euros is between 350 and 650 Euros.The property tax on the furniture is exactly 0 Euros if it is listed in the purchase agreement. The buyer therefore also saves exactly 0 Euros on the real estate transfer tax.That is basically correct, but there might be inquiries if, for example, with a purchase price of €250,000, €50,000 is allocated to the inventory.
There are indeed cases where the inventory is only used to reduce the property transfer tax. Once it reaches a certain percentage of the purchase price, it is likely to be critically questioned.
There are indeed cases where the inventory is only used to reduce the property transfer tax. Once it reaches a certain percentage of the purchase price, it is likely to be critically questioned.
Are there still invoices available? Then it shouldn’t be a problem, as long as a realistic value (current market value) is used.
Last year, we bought a house that included what we considered a lot of junk as inventory, because the seller claimed it was still very valuable. We didn’t expect the tax office to accept it, but they simply approved 65,000 (sixty-five thousand).
Last year, we bought a house that included what we considered a lot of junk as inventory, because the seller claimed it was still very valuable. We didn’t expect the tax office to accept it, but they simply approved 65,000 (sixty-five thousand).
S
saralina8718 Jun 2020 08:24I know this might sound a bit strange, but even the people at the tax office are familiar with the usual prices (imagine, they see many purchase agreements every day!) and they can fairly accurately assess whether the stated ratio between inventory and the rest is reasonable...
Honestly, most tax officials aren’t looking to catch someone out. Just make the contract realistic, without any tricks, and that’s all there is to it.
Honestly, most tax officials aren’t looking to catch someone out. Just make the contract realistic, without any tricks, and that’s all there is to it.
nordanney schrieb:
The property tax on the furniture amounts to exactly €0 if it is specified in the purchase agreement. The buyer thus saves exactly €0 on the property transfer tax. Correct, as long as it is listed as such in the purchase contract and assigned a value.
Example:
Purchase of a condominium for €300,000 including an existing fitted kitchen, which is not further mentioned in the contract => property transfer tax is calculated on €300,000.
Purchase of a condominium for €300,000 including an existing fitted kitchen, which is specified in the contract with a value of €10,000 => property transfer tax is calculated on €290,000.
This was the intended meaning of my previous post.