Cgt/income Tax

richy10

HI All

What a brilliant website/forum

Could anyone please answer the following questions for me?

I have recently bought an end terraced 2 bed house for £145,000 (11may 07)

I have gained planning permission to convert into 2 1bed flats. I have been told by an estate agent that i could sell each flat for £110,000.

Obviously this would be a profit of £65,000. As from 11 June I have put tenants in the house to cover my interest only mortgage. My deposit was £25000 if this helps.

What are the CGT/Income tax restrictions etc on this? Do I have to live in the house for a certain time to avoid cgt? Is this a business?

Any guidance, sums etc would be much apreciated.


Richy

Bean_Counter

If you are buying with a view to realising a profit, that sounds like trading to me.

Have a look at this thread as it recently covered some similar comments:

http://forums.moneysavingexpert.com/showthread.html?t=474456

Hence you would pay income tax / national insurance rather than capital gains tax.

richy10

Thanks Ben

Does this mean that income tax or national insurance would be less of a tax bill or more than cgt?!