CGT on renovating property

_Milly__2

Hi everyone,

I'm new to this and would like to clarify something:

If I buy and renovate a property and make (say) £20K profit after all fees etc have been paid, do I pay 20% CGT on this i.e. £4K?

If I reinvest the £20K in a similar buy and renovate type property, does it mean that I don't have to pay the tax?

Thank you in anticipation

Pennywise

If you buy a property with the intention of renovating it and selling it for profit, you are trading and your profits are subject to income tax and class 4 NICs - you need to register with HMRC as self employed, prepare business accounts and submit SA returns.

Only if you bought with the intention of either living in it or renting it out, would the eventual profits be subject to capital gains tax, as that makes it either your home, or as investment, not a trade/business.

In either scenario, re-investing the profits into another property wouldn't reduce your tax - you're probably thinking of CGT rollover relief which wouldn't apply in your example. You'd have to pay your tax on the profit and then use whatever was left to go towards your next property.