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Property Development - Profits & Tax

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  • Property Development - Profits & Tax

    I've been purusing this site for a couple of weeks now and decided to join. There are some extremely knowledgable and helpful individuals on here so I thought I'd post a query in the hope that somebody may be able to offer some help.

    For some time now I have been seriously looking at getting into property development and purchasing properties that are in need of renovation with a view to selling them on for a profit. My initial plan is to continue working my regular job and undertake the renovation projects on days off. I aim to start small to begin with and will finance the first purchase by borrowing £100k interest only against my main residence. Long term I hope to be able to make enough profit to be able to pay back the original loan and have a pot of money to move forward and continue with more developments.

    I am currently in permanent employment and have a well paid job. Being a high rate tax payer, what are my options to minimise the amount of tax I will be liable for on the profits from the sale of property? Do I just pay capital gains to keep things simple or set up a ltd company and draw dividends? My wife works part time and is on a low income so she could be a potential shareholder if I were to go down the ltd company route. It is my understanding that certain expenses (legal fees, interest on mortgage payments, materials for refurbishment etc.) can be offset against tax. Is this possible?

    Any advice or guidance before I book a consultation with an accountant would be gratefully received.

    Thanks.

  • #2
    Re: Property Development - Profits & Tax

    All expenses will be tax deductable.
    If you do not live in it it will incurr Capital gains Tax.
    If you go Ltd Co you will have to fork out for an accountant etc etc.

    As you have a well paid job why not just do that.
    This is not for the fainthearted and for those with no knowledge of building.
    The get rich quick are a thing of the past. Unless you are Sarah Beeny stay out of this!
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