Buying/Selling houses for profit!!

MoggyMCFC

If you can make lets say 40K profit on buying & selling houses how much would be taken off you by the TAX MAN
how much of the profit would be all yours ?:think:

Murdina

Depends. If you are trading then it's the profit you make taxed at income tax rates and strictly speaking if it is run as a business you should be registered as self employed and pay class 2 and class 4 national insurance.
If you were able to have it treated as a capital gain tax rates are the same but you may be able to reduce gain eg through taper relief. This is really only when you have held it as an investment (ie let it) or used it yourself.
If you were a higher rate taxpayer already the tax would be 40% and class 4 NI is currently 8% for income between £5,225 and £34,840 and 1% after that.If you currently pay tax on earnings at 22% then 40k is going to take you into the 40% band. Oh and if you pay NI on your earnings you might be able to get exemption from the NI on the house. I can think of some other complications if you like so maybe easiest to say work on 41% of 40k as the worst case scenario (and don't forget to tell them about it either - if you are not within self assessment already)

silvercar

You don't pay NI on CGT.

Remember to allow for expenses eg solicitors, mortgage arrangement fees, estate agents.

Then you have a CGT allowance of £9,200 per person, if not used elsewhere.

So a house in joint names = £20,000 profit each, £10,800 taxed at 40, 20 or 10% depending whether you are a higher, standard or non- tax payer.