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Capital gains tax

riza
riza Posts: 50 Forumite
Part of the Furniture 10 Posts Combo Breaker
edited 19 February 2015 at 2:53PM in House buying, renting & selling
Hello

I'm thinking to buy-refurb-sell a house, but I'm unsure of the capital gains tax. I do not currently own a house and am living with parents. I understand that capital gains tax only applied to 2nd homes. Would I have to pay tax?

Comments

  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    Capital gains tax is for properties that are not your main residence (among other things). It doesn't matter if you don't already own another property or not, what matters is that this property you want to buy-refurb-sell won't be your main residence.
  • riza
    riza Posts: 50 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Right, thanks for clearing that up for me
  • booksurr
    booksurr Posts: 3,700 Forumite
    edited 19 February 2015 at 3:18PM
    Pixie5740 wrote: »
    Capital gains tax is for properties that are not your main residence (among other things). It doesn't matter if you don't already own another property or not, what matters is that this property you want to buy-refurb-sell won't be your main residence.
    technically that is incorrect - the correct position is that if from the outset you buy a property with the sole intention of doing it up and then selling it you are considered to be a property developer, (even if you only do that once).

    Therefore you are liable for income tax on your profit. CGT is irrelevant in the context you refer to unless you wish to commit tax fraud.
    you can of course take a chance that HMRC will not spot it but do remember that every property sold iin the UK is notified to the HMRC computer and it might/should spot a proeprty sold soon after purchase even if it is the only property you own
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    So not just technically incorrect but in fact totally incorrect for the OP's situation. :o

    Thanks for the correct information booksurr.
  • theartfullodger
    theartfullodger Posts: 15,988 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    booksurr wrote: »
    .... .... but do remember that every property sold iin the UK is notified to the HMRC computer ....
    Why did I think that was only above a certain limit???

    https://www.gov.uk/stamp-duty-land-tax-transactions-that-dont-need-a-return
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    You have much to learn young one and CGT is way down the list!
    You need money for a deposit and other buying fees. Money to spend on property for refurbishment and then selling costs.
    If property does not have a working toilet and kitchen lender may not give you a mortgage or put a retention on property.
    Say you have all the money you need and move into property so it is your home for 6/12 months 75% council tax.
    When you come to sell the surveyor the mortgage lenders will send round to Value property will look on Land registry for recent sales and BINGO up pops yours which sold for £XXX,XXX only 6/12 months ago and now you are asking How Much !!!
  • kinger101
    kinger101 Posts: 6,787 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    theartfullodger wrote: »
    Why did I think that was only above a certain limit???

    https://www.gov.uk/stamp-duty-land-tax-transactions-that-dont-need-a-return

    I can't see that the property price is likely to be under £40K.

    Either way, if OP decides to go down the CGT route, there would still be reported in the CGT calculations. It would include the sale price, purchase price, along with the relevant dates. This alone could be a red flag for HMRC.
    "Real knowledge is to know the extent of one's ignorance" - Confucius
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