Capital Gains Tax

ms_newbie

A friend and I are considering buying a property to do up and sell on. I understand that we will then be able to deduct 2 x personal capital cgains allowance from profit before paying any tax due?

I have a quetion to ask. If my partner (not married but living together) also becomes involved in this project would we be able to deduct 3 x personal allowance before paying tax?

Thanks

ginger_nuts

you can have up to 4 people involved ,so the answer is yes .
Just remember the personal allowances are per tax year and not per property .

WHA

Hang on!!!!

If you buy anything with the intention of resale and profit, you are TRADING, so would be liable to income tax and NIC on the profits, not capital gains tax, so no annual exemptions at all - profits would be taxed at each person's marginal tax rate.

To get capital gains tax treatment, you need to intend to keep the property as an investment, i.e. rent it out or live in it yourself for a while.

RayWolfe

And even if it was not a business, personal allowances can only be deducted if not already allowed against other income. Or are you saying that all two/three/four of you have no job, no investment or savings income BUT can afford to buy houses?

kennyboy66_2

WHA wrote: »

Hang on!!!!

If you buy anything with the intention of resale and profit, you are TRADING, so would be liable to income tax and NIC on the profits, not capital gains tax, so no annual exemptions at all - profits would be taxed at each person's marginal tax rate.

To get capital gains tax treatment, you need to intend to keep the property as an investment, i.e. rent it out or live in it yourself for a while.

I would think that if this is a first isolated profect, it is highly unlikely that this would constitute trading.

However it is something the OP should consider if intending to repeat the exercise.