House swaps and lowering SDLT liabilities

[Running_Man]

Thanks for looking at this question. You advice is appreciated.
I plan to swap houses with a neighbour...they are downsizing and we are upsizing. Our house is valued at £285k and their house is valued at £375K. I understand that it is no longer possible to work out the SDLT based on the difference between the two i.e. £90K however if we were to sell our house for £249999 and the neighbours dropped their house price by a corresponding amount would this be legal? The neighbours are not related in any way to us and our house is not currently on the market. How is "market value" ascertained?

Your assistance is appreciated.

[CDavey9501@aol.com]

I'm sure the market would pay more!

[brownia]

In property exchanges, for SDLT purposes when there is an exchange of major interest in the land or building, then the "chargeable consideration" will become the market value of the property. You cannot set the price to avoid/reduce paying SDLT as current legislation prevents this.

An example of property exchanges which seems to fit your situation, shown below, is taken from the HMRC website:

Example 1
Mr Blue has a house with a market value of £600,000.

Mrs White has a house with a market value of £700,000.

They exchange with Mr Blue paying Mrs White £100,000.

The chargeable consideration on the acquisition by Mr Blue is £700,000.

The chargeable consideration on the acquisition by Mrs White is £600,000.



If you need any further help (or require your SDLT forms to be completed), please do not hesitate in contacting me.

Regards
Ian
ir.brown@yahoo.co.uk