Tax implications with selling properties

Tackyplum

I am soon to be divorced and will have to sell the family home as a result. I will take 50% of the equity which I intend to invest in another property. My plan is to buy something that needs work and hopefully sell on a for a little profit. I intend to continue to do this until I have enough funds to purchase an ideal property. Each property will be classed as my main residence whilst I carry out the works but intend to only have each property for a few months. Can anyone tell me what the tax implications are/could be. Many thanks and sorry for the very long post.

kingstreet

If you intend to "flip" property that quickly, after two or three, you'll probably be deemed a professional property developer by HMRC and then the sales will be see any profit taxable.

IIRC these profits are taxable as income, rather than capital gains, although one of the other property gurus may be able to clarify this.

Please remember, if your potential buyer needs a mortgage, many lenders will not accept an application if you have not owned the property for at least six months.

Dave_the_Ginger_Cat

AFAIK if it's your primary residence you should be OK. The market can be sluggish, so do bear in mind you might end up with the houses for longer than is ideal for you.

kingstreet

You may wish to read this;-

http://www.property118.com/tax-treatment-property-development-vs-property-investment/31172/

and this;-

http://www.property-tax-portal.co.uk/taxarticle88.shtml

Although the original intention of the owner is an important one, when deciding whether a person is trading HMRC will look at a variety of factors. These include:

length of ownership;
whether the purchase and sale is a one-off or one of a series of transactions;
whether the property has been rented out;
whether the property was acquired for personal enjoyment; and
whether there is a connection with an existing trade – for example a builder buying a property to do up and sell.

Together these will create a picture and help determine whether a person is trading or investing.

tim123456789

kingstreet wrote: »

If you intend to "flip" property that quickly, after two or three, you'll probably be deemed a professional property developer by HMRC and then the sales will be see any profit taxable.

.

ISTM the chances of the revenue going to a court to prove that someone taking two to three years to do up a property is a professional developer, resulting in anything other than hysterical laughter, is most unlikely

tim

martindow

Another possible issue is that buyers can have difficulty getting mortgages if a house is being resold within six months of buying. I don't know how quickly you would work and expect to turn around a house - might not be an issue at all!

kingstreet

tim123456789 wrote: »

ISTM the chances of the revenue going to a court to prove that someone taking two to three years to do up a property is a professional developer, resulting in anything other than hysterical laughter, is most unlikely

tim

The OP says "a few months" not two to three years.