CGT & Renovating Property

TheDink

This is a theoretical question at the moment, but is hopefully in the pipeline soon.

I currently own and live in Property 1. If my partner and I continue to live in Property 1, and we buy Property 2 together (delapidated and in need of renovation), do up Property 2, then sell Property 1, move into Property 2, and buy Property 3 (to renovate), and continue the cycle...

Will we be liable for capital gains tax or would we be exempt from it because we will always be selling our main residence?

If we are liable for CGT, am I right in assuming that we only pay tax on the profit from the sale (less our renovation costs)?

Thanks!

johnllew

Keep doing it and you will be liable to income tax on the profits from no. 2 onwards in the same way that any other builder would be.

TheDink

Thanks. I think a trip to the tax office is in order before we start on anything.

Chris13_2

I've researched this one....best thing to do is live in the property for 6 months (ensuring you're on the council tax register) then move on. If you do this for each property you won't be liable for CGT

johnllew

I've researched this one....best thing to do is live in the property for 6 months (ensuring you're on the council tax register) then move on. If you do this for each property you won't be liable for CGT

But it's very likely you will be liable to income tax, which takes priority over CGT.