Cosmetic buy to sell

catoutthebag

I have always wanted a buy to let, as the area I'm in continues to go up and I'm up on the market here.

But funds haven't allowed for a second property.

Thinking a way of getting funds is to buy a property needing cosmetic treatment rather than structural (carpets removed, wallpaper stripped, basic bathroom and kitchen)

I'm talking flats here. I'm a flat owner in the area so a) know the local market b) know the things that need doing as I had them done to my flat.

As a guesstimate and knowing people in the trade, I could fork out 1-2k, with a sale price of around 10k profit, excluding fees, but profit may be slightly higher . Short turnaround time.

My questions
- with fees added in, is a projected profit of maybe 6-8k worth it as a first project!
- what mortgage would I need?
- would I pay tax on the sale?

Thanks

booksurr

so you wish to become a property developer

you think that a lick of paint and a new carpet will add £10K to the selling price?

give up watching daytime property !!!!!! shows and rethink your budget. Professional developers will be competing hard with you for anywhere with that sort of margin.

you will struggle to get funding unless you are prepared to lie on your application form as you are not buying a place to live in so many lenders would not give you a residential mortgage, instead they may give you a development loan or a commercial mortgage

unless you intend to lie to HMRC you will be classed as a property developer not a property investor and so will be liable to income tax not CGT on your profit as you are classed as a "trader" even if you only ever do this once

having said all that plenty of people do undertake property development and make a go of it so if you are prepared to take risks then go for it

Pixie5740

If you want to buy a property, do it up and then sell it on for a profit (hopefully) is that not property development?

As you want to buy a property with the sole intention of doing it up and selling it on then booksurr is right, it's not a mortgage you will require but a commercial loan and you'll pay income tax on any profit.

Is £1k to £2k realistic for all the materials, labour and does that include the costs of buying & selling?

SternMusik

If you retain your residential property you'll be liable for an extra 3% stamp duty on the investment property, I believe.

martindow

Assuming you can actually spend £2000 and sell for £10000 more than you paid, I'm not sure that you could make any money.

If you already own a house you will have to pay an extra 3% stamp duty on the purchase, you will have two lots of legal fees and an estate agent's fee to sell. If you are needing a mortgage to finance this there is more cash to be paid.

It doesn't look like a business to me.

PS Can I suggest that you are less reactive to posts; it doesn't encourage people to reply to threads.

catoutthebag

Pixie5740 wrote: »

If you want to buy a property, do it up and then sell it on for a profit (hopefully) is that not property development?

As you want to buy a property with the sole intention of doing it up and selling it on then booksurr is right, it's not a mortgage you will require but a commercial loan and you'll pay income tax on any profit.

Is £1k to £2k realistic for all the materials, labour and does that include the costs of buying & selling?

A) I've said excluding fees and given projected profit
B( I've never argued it wasn't development? So what's your argument?

theartfullodger

As a property developer you would pay income tax on the profit, not CGT.

Someone sounds angry & touchy, and it ain't booksurr....

Suggest you re-run your numbers using the "Artful" patented cost & project estimating tool: It will take twice as long & cost three times as much as you estimate: Or possibly the other way round. If it still stacks up then, maybe, proceed.

Serious, non-Europe point: Could you afford to take a hit if property prices suddenly dip, for whatever reason, whatever the outcome it, after the referendum?

Cheers!

catoutthebag

martindow wrote: »

Assuming you can actually spend £2000 and sell for £10000 more than you paid, I'm not sure that you could make any money.

If you already own a house you will have to pay an extra 3% stamp duty on the purchase, you will have two lots of legal fees and an estate agent's fee to sell. If you are needing a mortgage to finance this there is more cash to be paid.

It doesn't look like a business to me.

PS Can I suggest that you are less reactive to posts; it doesn't encourage people to reply to threads.

I think your last point should be aimed at the first person that replied to me because my OP and reply were polite.

Also I never suggested that this is a business to me . I'm considering trying it to see what happens , just as I'm sure you've tried things in life to see the outcome

catoutthebag

theartfullodger wrote: »

As a property developer you would pay income tax on the profit, not CGT.

Someone sounds angry & touchy, and it ain't booksurr....

Cheers!

Given my polite and measured responses , it sounds like you're referring to bookdurr, but thanks for your initial sentence of advice

marksoton

catoutthebag wrote: »

Also I never suggested that this is a business to me .

In which case you shouldn't be doing it.

catoutthebag

SternMusik wrote: »

If you retain your residential property you'll be liable for an extra 3% stamp duty on the investment property, I believe.

Ok thanks for info