2 properties, whats the deal with paying tax?

rizla01

You would need to do this only if you were earning in excess of the allowance.

You would also need to pay NIC contributions as well as te NI stamp. Personally, I haven't but will pay it in one lump when I get round to it.

Well that what I've been doing for the last 10 years and haven't come unstuck yet but someone on here will probably tell me I'm doing wrong.:)

pootle666

Rixla01, if your wife is employing you then you're not self-employed, your employed & if below threshold, so there would be no Class IV NI & you don't need to pay the Class II (what used to be called the stamp). I suppose you would have to if you were issuing invoices to you wife for your work, but I reckon you'd be on dodgy ground there.

You definitely can't CHOOSE between whether you pay CGT or IT, it would be down to the facts of the case, whether you are trading in property to make a profit, or whether you are selling a capital asset, it doesn't necessarily have anything to do with whether you have another job or how much time you spend on it, it's the intention to make a profit & the definition of an asset & there's no easy answer to this, each case would be looked at independantly. Obviously the CGT route is usually less tax & on a one-off transaction you'd probably be pretty safe with assuming it was CGT & calculating tax as such. If you were to continue to buy & sell property in this way, when it's not the house you live in, HMRC are likely to want to have a chat.

However, depending on the costs of redevelopment & the interest on the loan it may be a close call which is best for you. You would be best making friends with an accountant & having a proper look at the figures.

There's been quite a bit in the press in recent years about HMRC being interested in people doing up property & selling on, as it's big chunks of money that they're not getting tax or NI on, especially with all these TV programmes. So it's worth taking care over, seek a bit of advice.

One other thing as your partner & you are not married if you were to transfer the property into joint names that would be a CGT transaction itself, so you would have to calculate a gain based on a valuation at the time you did it, so might not be favourable, plus of course, legally the house would be half theirs, so consider that too.

There are lots of factors to consider - take professional advice, although accountants do charge, it's because they've spent years learning this stuff, so they know the pitfalls and the loopholes.