Everything including the kitchen sink

You've done your sums, found that sought-after house in the country, exchanged and completed. In a few weeks you'll be transforming it into your own period show home. But there's something you've overlooked in your budgeting. Yes, it's stamp duty.

Jennifer Israel, a specialist property lawyer, says: "The recent increases in duty have made people turn to fiddles to get round paying it, but you can pay less duty perfectly legally with help from your solicitor and accountant."

If you choose to break the rules, you risk heavy fines and even imprisonment. And since stamp duty rose in 2000 to 1 per cent for homes valued £60,000-£250,000, 3 per cent for £250,000-£500,000 ones, and 4 per cent thereafter, the Inland Revenue has kept a close eye on house sales. Last year the Goverment raised £2.7bn from stamp duty.

So here's how to reduce the tax on your next home deal. First, treat the property and its estate as one transaction. Second, split off the internal fixtures, fittings and furniture – the three Fs – and make that a separate item.

Under the "Contents Rule", a property should be left with all its basic fittings such as light bulbs, overhead light shades, curtain rails and, in some cases, carpets. There are many tales of buyers who move in to find their dream home has become a featureless shell, but most owners have enough self-respect to leave their homes more or less as they found them.

Recently, though, the three Fs have taken on a greater role. Let's assume you have found an elegantly furnished town house with many attractive extras. If the homeowner is willing to include them, it'll certainly ease those moving-in moments, save a few visits to John Lewis, Heal's or Ikea, and add some deft touches to your new home.

And if you discover the three Fs are worth between £20,000-£50,000, and your property is hovering on the edge of a stamp-duty band, you could use them to save 1 to 2 per cent duty – depending on the price of the house.

Here's an example. After a six-month search, you alight on a delightful four-bedroom detached house in Gloucestershire. The asking price is £533,000, you make an offer of £523,000 and it is accepted. You now have a stamp duty bill of £15,690 – or 3 per cent. You discover, however, a treasure trove of Georgian chandeliers, plush carpets, silk curtains and some stylish oak cabinets inside. You speak to the owners and they are willing to sell.

Next, you call in a professional inventory clerk, who will assess the items' value and draw up a bill of sale. Under the Contents Rule, your solicitor will present this to the owners' lawyers before agreeing a final price, which in this case we will call £25,000. An agreement is drafted and the items deducted from the price of the house.

Instead of £15,690, you are now liable to pay £9,960 stamp duty, as the house is assessed at £498,000 instead of £523,000, a nifty saving of £5,730. If, say, your new home had an asking price of £265,000, and the owner agreed to sell you £16,000 worth of the three Fs, you would save £5,460 – again, because you'd move into a lower duty bracket.

The attractions of cut-price stamps have spawned many an ingenious deal. Some buyers pay their sellers' estate agency fees to bring them into a lower band. Rex Chalmers, manager of Hamptons' office in Pimlico, knows of one client who bought the owner's S-Class Mercedes to cut his bill. "Because all items have to be free-standing, I've even seen people include kitchens that are not screwed down in the totting-up process."

Jennifer Israel favours duty based on a sliding scale. She believes that anyone buying a house for £100,000 or under should be exempt, that properties in the £100,000-£250,000 bracket pay 1 per cent, and anything above levied on a percentage basis.

This would mean that new owners of a £400,000 house would pay 1 per cent on their first £250,000 and 2 per cent on the other £150,000. A stamp super-saver, you might say. "The whole system needs to be revised, otherwise UK property will become a sellers' market. The current duties kill the market and when duty went up in 2000 it stopped people buying for at least six months. I just hope the Government doesn't put it up again in the April Budget," Israel says.

Rex Chalmers agrees: "Sellers should ask realistic figures for their fixtures, fittings and furniture, and they shouldn't make out that items such as door-knobs are worth £500 just to hitch up the price – though I've seen some very attractive crystal ones worth £200-£300 apiece."

So when duty calls, make sure you get your mathematics right. It could trim thousands off your next conveyancing bill.