Different Between Cov And Undeclared Cash

[dannywmp 3]

Hi,

Some agents or seller practicing "under-table" cash transaction when selling their unit.

My queries:

1) What is the different between COV and this "under-table" transaction

2) What does the seller gain from doing the "under-table" transaction, since both ways involved buyer giving them Cash money?

The agency say that the seller do so because they need the cash to do renovation for new house etc... but from my understanding if someone selling their flat, the amount of cash proceeds generally is the amount balance from:

selling price - (CPF utilised + interest)- HDB Loan outstanding - Misc(Conveyancing fee, legal fee etc)

Using the following example:

Unit Valuated at =$280K

(CPF utilised + interest) = $200K

HDB Loan outstanding =$70K

Misc = $2k

For the case of COV at $20K, Selling Price = $300K (280+20)

therefore Amount of Cash Proceed after unit sold will be = 300K- 200K - 70K -2K = $28K

but for the case of "Under-table" transaction, assume the seller request for $20K to be under-table, with the same figures stated for calculation, what is the amount of cash proceed the seller get from the transaction.

Kindly advice, thanks...

[Phantom 1]

Hi,

Some agents or seller practicing "under-table" cash transaction when selling their unit.

My queries:

1) What is the different between COV and this "under-table" transaction

2) What does the seller gain from doing the "under-table" transaction, since both ways involved buyer giving them Cash money?

The agency say that the seller do so because they need the cash to do renovation for new house etc... but from my understanding if someone selling their flat, the amount of cash proceeds generally is the amount balance from:

selling price - (CPF utilised + interest)- HDB Loan outstanding - Misc(Conveyancing fee, legal fee etc)

Using the following example:

Unit Valuated at =$280K

(CPF utilised + interest) = $200K

HDB Loan outstanding =$70K

Misc = $2k

For the case of COV at $20K, Selling Price = $300K (280+20)

therefore Amount of Cash Proceed after unit sold will be = 300K- 200K - 70K -2K = $28K

but for the case of "Under-table" transaction, assume the seller request for $20K to be under-table, with the same figures stated for calculation, what is the amount of cash proceed the seller get from the transaction.

Kindly advice, thanks...

Typically happens in times when COV is difficult and in times when seller desparate for cash in hand urgently, e.g. maybe they cannot borrow from bank to pay for new house etc. or already broke to the $ in the bank account, Seller tells buyer that valuation is 300k. Buyer not biting, so seller says i sell you at 280 + 10k cash. so you buy house at 290. Seller gets cash of 10k.

The long story short. It's illegal. Falsifying transaction. Agents involved. Buyer + Seller all will get into trouble with Mr. Lawman.

Edited July 21, 2009 by Phantom

[Phantom 1]

Typically happens in times when COV is difficult and in times when seller desparate for cash in hand urgently, e.g. maybe they cannot borrow from bank to pay for new house etc. or already broke to the $ in the bank account, Seller tells buyer that valuation is 300k. Buyer not biting, so seller says i sell you at 280 + 10k cash. so you buy house at 290. Seller gets cash of 10k.

The long story short. It's illegal. Falsifying transaction. Agents involved. Buyer + Seller all will get into trouble with Mr. Lawman.

Another issue is the cashback issue when people collude to inflat the price of the HDB. to take more loan from Bank.

[Warrior88 0]

Undeclared COV - Seller have negative sales, meaning they cannot get back cash from CPF if sold.

But they wanna pay agent comm.

Declared COV for gain sales, because either way, they will still get back this cash.

[born_again 0]

Typically happens in times when COV is difficult and in times when seller desparate for cash in hand urgently, e.g. maybe they cannot borrow from bank to pay for new house etc. or already broke to the $ in the bank account, Seller tells buyer that valuation is 300k. Buyer not biting, so seller says i sell you at 280 + 10k cash. so you buy house at 290. Seller gets cash of 10k.

The long story short. It's illegal. Falsifying transaction. Agents involved. Buyer + Seller all will get into trouble with Mr. Lawman.

if the figure 290k is declared then its legal as the eventual sales proceeds would be computed from 290k. Its illegal and considered undertable when the extra undertable amount is not declared to HDB.

eg. Valuation: 300k

Seller willing to sell the flat below valuation at 250k BUT want an undertable of 20K that would not be declared to HDB so the resale transaction only shows 250k even though seller and buyer agreed to 'transact' the flat at 270k

Seller gain the 20k CASH from buyer w/o HDB knowledge

Buyer 'gain' from buying the flat below valuation....would be considered much lower if buyers entitled to 1st timer grant or stay near parents grant.

Edited July 25, 2009 by born_again