Welcome to the reallymoving forum
Got questions and need some advice? Our forums have answers on everything from choosing the right property, to renting and selling.
  • If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below.

Announcement

Collapse
No announcement yet.

Capital Gains Tax?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Capital Gains Tax?

    Hi everyone,

    the senario this time next year will hopefully be that me and a couple of mates will be buying a property in need of modernisation, new kitchen/ bathroom, bit of re-skimming, re-decoration/ carpets etc. nothing too major.

    would hope to have the development turned around within two months and back on the market for re-sale.

    what are the rules regarding Capital gains tax?

    I've had a look online and can't make head nor tails of it at the minute, I understand its around 18%.

    to cut a long question short, if this is the only property we are developing at the time, will we have to pay capital gains on any profit we make on the re-sale having only owned the house for 2-3 months?

    hope someone can help, would be much appreciated.

    Mike

  • #2
    Re: Capital Gains Tax?

    As far as I am aware:
    If it is your only main residence, that is you dont own any other residential property, there will be no capital gains tax.

    If you are buying with others, it is a business and will be taxed as such.

    There is no escape from death and taxes!

    I would recommend you see a Tax consultant if you are buying and developing with others.
    BRAND NEW HOMES
    Information for UK new home buyers
    New Home Blog The latest news and views

    Comment


    • #3
      Re: Capital Gains Tax?

      You will have to pay CGT at 18% unless it is your primary residence at the time of sale (or it has been your primary residence in the last 3 years. Definitely worth speaking to a tax adviser - they can do some very clever things!
      Large mortgages and High Net Worth Mortgages from enness private clients

      Comment


      • #4
        Re: Capital Gains Tax?

        thanks for the advise guys :-)

        Comment


        • #5
          Re: Capital Gains Tax?

          if it is the only development you do in a tax year then each person involved will have an annual allowance for capital gains and this may well make a big hole in the possible tax liability. Check with a tax adviser.

          Also remember that you can't in practice turn these round in less than 6 months because mortgage lenders rarely lend now to people buying from those who have owned a property for less than that period. Don't ask me why they have this rule in your kind of case - but that's the way it is.
          RICHARD WEBSTERwww.rwco.co.uk
          As a conveyancing solicitor I want to be helpful (England/Wales only) but can't accept liability for this.

          Comment


          • #6
            Re: Capital Gains Tax?

            The 6 month rule is more for people trying to refinance the property themselves and not really for those purchasing. As far as CGT if all 3 of you own the property in joint names then you should be able to use each of your annual allowance, together with all the costs involved in renovating the property to offset your CGT liability.
            Anthony
            Compare the Mortgage Market
            http://www.comparethemortgagemarket.com

            Comment


            • #7
              Re: Capital Gains Tax?

              The CGT rules are very, very poorly and sparsely written about online so I had to do alot of digging to find the following as I am planning to flip properties like you. I can't post links so will just copy and paste the quotes and website names.

              "Usually if you pay Income Tax on the gain or profit you make from disposing of an asset you won't have to pay Capital Gains Tax on the gain too. For example, if you're trading as a property dealer, jewellery maker or antiques dealer." HM Revenue & Customs

              And then there's this:

              "People who invest in property short-term, with the intention of selling it to generate a dealing profit, tend to be referred to as Property Dealers. Property Dealers are liable to pay Income Tax only. Even when they sell the property they will be liable to pay Income Tax. And not Capital Gains Tax." No Use Empty

              Comment


              • #8
                Re: Capital Gains Tax?

                As you can see from all the posts CGT is a tricky subject and the best people to speak to are always tax advisors they deal with these sorts of problems all of the time.

                One thing to think about as well would be looking at how much the early repayment penalty would be on any mortgage you may get to buy your property. This could eat into your profit margin at the point of sale. Remember as well CGT is paid the following financial year not at the point of sale.

                Comment


                • #9
                  Re: Capital Gains Tax?

                  Most mortgages these days are portable so the early repayment charges shouldn't be a concern. The TMW mortage I'm getting ports for free so I can buy sell buy sell buy as much as I want with that same mortgage. The mortgage for my main home - from Natwest is also portable.

                  Comment

                  Working...
                  X