Property Development

Doozergirl

princess275 wrote: »

hi,

Now is one of the best times to invest and make money from property. it just depends on what your strategy is. You need to take note of the 6 months flipping rule mentioned by googler in post 2. It is restricting the common person but there are still creative ways to make money from property.

There is no 6 month rule. It's suggested that this is the minimum that might be accepted as a PPR but if you keep doing this, it's going to become obvious what you are doing. Likewise, there may be a perfectly legitimate reason for moving once in an even smaller timeframe. If HMRC think you're trading, you won't shake loose under a 6 month rule because it does not exist. If they want you, they'll have you!

sjcollett

Ooh princess tell us more about the US deals they sound fab!

GDB2222

Doozergirl wrote: »

There is no 6 month rule.

It's likely that solicitors have this as a guideline for money laundering purposes, ie they have to report you if you are selling a property you have only just bought.

Obviously, one way of laundering money is to buy a property, do it up paying cash to the builders, then sell it on for a profit which can actually be banked. Yippee! You can probably get away with doing that once, but if you make a habit of buying and selling property quickly, that will show up on the money laundering records and you'll be investigated.

Doozergirl

GDB2222 wrote: »

It's likely that solicitors have this as a guideline for money laundering purposes, ie they have to report you if you are selling a property you have only just bought.

Obviously, one way of laundering money is to buy a property, do it up paying cash to the builders, then sell it on for a profit which can actually be banked. Yippee! You can probably get away with doing that once, but if you make a habit of buying and selling property quickly, that will show up on the money laundering records and you'll be investigated.

Solicitors have to report every transfer of property on the Stamp Duty forms. They shouldn't need to highlight transactions that HMRC can pick up by themselves quite easily.

AFAIK there is no 6 month rule for declaring a property as your PPR. A buyer's solicitor should highlight to a lender if they are aware of that being the case, a seller's solicitor has no such duty that I am aware of - I was asking my solicitor after a thread on here about obtaining a mortgage on a property that is being sold on within 6 months.

You can legitimately claim your PPR for less than 6 months if that is genuinely the case but you cannot be a property developer selling houses every six months and declaring them as your PPR and expect not to pay tax - there is no rule that says if you move PPR and leave at least 6 months between the two that it means you are not tradin - this is a misconception. If you look like you are trading they will expect you to pay tax.

chappers

Doozergirl wrote: »

If you look like you are trading they will expect you to pay tax.

This is very true, I have a friend who's parents owned 5 houses including their PPR, they thought they could get round CGT by renovating and selling them up serialy, moving into each one for between 6 months and a year each time.
Not long after the sale of house number 4 they get a letter from her maj saying that they believe they are trading and that their accounts are about to be investigated.
They were given allowance for house number 1 and number 5 but were clobbered for tax on houses 2,3 and 4.

GDB2222

Doozergirl wrote: »

Solicitors have to report every transfer of property on the Stamp Duty forms. They shouldn't need to highlight transactions that HMRC can pick up by themselves quite easily.

The solicitor has an obligation to file a 'suspicious transaction report', but it must help if they have some broad guidelines about what may be regarded as suspicious. I expect that's where the 6 months comes in.

We all know that the money laundering rules are there to discourage tax fraud, but there's a fiction that it's to do with proceeds of crime. Hence, the report is actually made to the NCIS - or at least it was when I was my firm's MLRO.

The SDLT1 form does not include a space for the date of the original purchase of the property to be filled in, so it might be quite difficult for HMRC to pick up on this. It depends on what systems they have in place, of course. It's much more sensible from the point of view of the authorities simply to place the burden on the solicitor of deciding what is a suspicious transaction and then reporting it.

Bermuda_John

why not set up a limited company and sell the shares in the limited co instead of the property itself ..... less tax

princess275

Hi sjcollet

The US property bargains I have been looking at are essentially repossessed properties in the States. The US property market got hit significantly harder than the UK and as a result the prices tumbled by more than 505 in places. It is now possible to pick up repossessions that would have been worth well over $100,000 for around $45,000+ mark.

Banks are cutting their losses and selling properties at any cost. The crazy thing is that these are perfectly good properties that have tenants waiting to rent the properties for $800+. For example I am looking at a fully refurbished deal at the moment that is around $49,900 with a rental return of $900. That’s a gross earning of $10,800 in a year. I don’t see many other investments that give that return. Not only that, you also end up with a property that has instant profit of thousands of $$$. All the properties I am looking at are fully refurbished with tenants waiting so they are no brainers.

I posted a link of a company I use to buy these and UK deals from. Ether pm me or I can post the link here if you like

Cheers

Sonia

googler

The 'instant profit' seems to be calculated on the basis of 'Market Value less Purchase Price' - but that's only a profit if you can buy, then resell at the market value.

This seems unlikely, since if the house could be sold at the market value, it would be put on the market to achieve that sale.....

GDB2222

princess275 wrote: »

I posted a link of a company I use to buy these and UK deals from. Ether pm me or I can post the link here if you like

I'd be interested to see that link, please.