Splitting 1 Property in to 2 and Selling 1

jet77

Hi,

I bought my home July 2005 and have (temporarily) got an interest only mortgage of £91k. The property has the potential of being split in to 2 at a cost of £30k including everything from moving metres to solicitors fees (have got 3 quotes for info from builders). The sale of the bottom property would be between £70-£80k. Has anyone done anything like this before? Is it worth getting myself in to this much debt? Are there any reliable builders in Birmingham who won't rip me off?

Apart from 101 questions I have in my head my big one is taxation. Would it be more beneficial to do a Business Plan and register as Self Employed (have experience in this already) to avoid Capital Gains tax? - someone told me this is 40% :eek:

All input welcome as am doing this project on my own and value all opinions given.:beer:

robwend

i would think about this very very hard, this is not a ideal first timers project, and not a diy job, i personally wouldnt do it unless id already been in the buying and selling game a while, the pit falls are hard

jet77

Yep - I totally agree with you and think that it is definitely something that needs planning down to the very last detail - especially the loan repayments.

Do you know anything about Capital Gains Tax?

Doozergirl

Done it before and done it in Birmingham!

Conversions are really hard work. You must make sure that you get Building Regulations sign off for the conversion because your future sales will absolutely hang on it. There are stringent regulations concerning escape, fireproofing and soundproofing (which is incredibly expensive). You may even have to replace the windows, even if they look okay! An architect would be a very good idea in this instance to make sure you've covered all bases and to guide you through the BR minefield. Mistakes are VERY expensive! A guide figure for me, especially using a builder to project manage would be more like £50,000.

You're better off posting on the Cutting Tax board on the CGT front, though it might be possible that because the house is your main residence that it won't actually qualify for CGT even though you're converting it? I really don't know though.

Of course, we know a reliable builder and all the relevant tradespeople in Birmingham.

robwend

sorry hun i dont, <<<blonde

robwend

oooooo hello doozer!! good to see you again!!!:D

Doozergirl

Welcome back robwend! Have you settled in okay? How is it?

The old place has been dull without you!

(Apologies to OP for taking this OT!)

jet77

Wow - This is the first time I've use this chat forum and it's soooo cool!!!

Doozergirl - I would be really interested in getting some contacts off you.

I have contacted a few architects for quotes and the prices range from £900-£1200 for them to do the survey, drawings and submit the planning and building reg apps.

50k!!!!!!!!!!!!!! I thought 30 was bad!

BobProperty

jpet77 wrote:

Hi,
I bought my home July 2005 and have (temporarily) got an interest only mortgage of £91k. The property has the potential of being split in to 2 at a cost of £30k including everything from moving metres to solicitors fees (have got 3 quotes for info from builders). The sale of the bottom property would be between £70-£80k.

That's quite a spread, can you get a more accurate figure?

jpet77 wrote:

Has anyone done anything like this before?

Yes, well, similar. Turned a 4 bed house into 2 flats. Would have made about 12-13k if I'd done it 6 months earlier, as it was I was too late and was caught out by the price crash in early 90's. (spent £77k valued £46k honest !)

jpet77 wrote:

...Apart from 101 questions I have in my head my big one is taxation. Would it be more beneficial to do a Business Plan and register as Self Employed (have experience in this already) to avoid Capital Gains tax? - someone told me this is 40% :eek:

Don't think you'd pay tax as it is disposal of PPR, but it needs checking as there may be special rules in these circumstances. Don't know why you want to register as SE, what did you think the benefit was? CGT is added to your income for the year and you pay tax at going rate. If you make £50k then you are likely to have to pay some of it at 40%.

jpet77 wrote:

.... as am doing this project on my own ...

How long will it take then? Thought you were getting builders in?

robwend

hi ya doozer!! no my move went BAD!!!!!! was not left vacant possesion, still furnished and what wasnt left in the house was put in the green house!!! got a big crack running down lounge wall, <survey never picked it up under 12 layers of wall paper lol, got onto solicitor about the sellers crap and after 2weeks got a letter back saying because i wanted a quick move thats why the house wasnt empty because he didnt have time!!! UNREAL!! lol never moving again lol

jet77

soz for delay Bobproperty, PC crashed!!

Price for flat - can't really be more specific coz can't find flat in area for sale that also has offroad parking and a large garden and brick built shet.

Property Market - Oh my god - have you recovered and if so how long did it take?

Tax - Thought that SE might be best coz then would have to pay 17.5%VAT instead of 40% CGT plus I have been SE b4 and have a reliable free business advisor and contacts at The Prince's Trust who may be able to provide me with a grant/v. low interest loan and also valuable input.

Alone? - Yes I will get builders am not going to break my nails (hopefully) but all my family lives quite far away and although I talk to my friends about my plans it's quite scary to make decisions about this when they involve such big financial implications - and I no it sounds stupid but despite being nearly thirty, it seems like such a grown up thing to do!!