Do we need to pay tax on property?

jimmy1_2

Hi,

Am looking to buy a property, do it up, & sell it on quickly. However, the mortgage advisor thought that i would have to move into the property for 6 months to avoid paying some sort of tax - is this true? I wasn`t really planning or wanting to do this!

Does anyone know about tax implications when buyinga house?

Thanks.

natwill_3

Depends if its your PPR..If you already have a home you will pay CGT at 40%

http://www.hmrc.gov.uk/leaflets/cgt1.htm#f

mi-key

The Inland Revenue are very hot now on amateur property developers trying tax evasion ( which is what your mortgage advisor is advising you to do ).

If you buy a house with the intention of making a profit from selling it, rather than having it as your own personal residence ( i.e. your main house ) then you will have to pay tax when you sell it.

The key thing is that you are doing this as a business ( irrespectiv of if you have another job, or you see this as just something on the side ) - if a business makes a profit, they have to pay tax on it, unfortunate, but thats the law.

I realise 'Property Ladder' etc... dont generally mention tax when they say 'so and so made £50K on this' - what they should say is they made £50K before tax, but walked away with considerably less once the IR had their chunk.

Unless you can provide the IR with a very good reason why you bought a place, did it up and only lived in it for 6 months, while owning another perfectly good house, then sold it, they will expect you to pay tax.

To be honest, the best thing to do is go and speak to your local IR office - they will be able to tell you what you need to legally, and what you will have to pay. Taking advice from mortgage advisors, mates etc... about how to avoid paying the tax is all well and good, but they arent the ones who will have to pay the fines or end up in prison once the IR send you the summons.

clutton_2

you definitely need to talk to an accountant before you do this - but do find out if s/he has a portfolio of property hiim/herself before employing them. You can lose shed loads of money unnecessarily if you do not buy in the most tax-effective manner. only an accountant who has all the info about your circumstances can really advise you. most of them give you half an hour free initially.

jimmy1_2

Thanks.

I don`t own any property, am renting at the moment - does that change anything?

jimmy1_2

Thanks.

I do not have any property, am renting at the moment - does that change anything?

seven-day-weekend

If it is not your main home you ill be liable for Capital Gains Tax, whether or not you own another one.

Why not live in it for a couple of years if you are renting, then sell it? If it has been your main home you will not need to pay CGT.

lynzpower

I realise 'Property Ladder' etc... dont generally mention tax when they say 'so and so made £50K on this' - what they should say is they made £50K before tax, but walked away with considerably less once the IR had their chunk.

Could not agree more with this. Also winds me up when Sarah Meany says things like "they have moved in as they liked it so much they will live there till they find their next project" "theyll live there till the market rises" Glossing over the issue and then some.

Pennywise

lynzpower wrote:

Could not agree more with this. Also winds me up when Sarah Meany says things like "they have moved in as they liked it so much they will live there till they find their next project" "theyll live there till the market rises" Glossing over the issue and then some.

Quite true, but I always think "they've moved in or rented it out because they've realised how much tax they'd have to pay if they sold it"