Many questions on buying to refurb and sell :)

lewis-dp

Hi,

I am just at the research phase of a possible new venture - my father-in-law (to be) and I are interested in buying property to work on before selling it on, hopefully at a profit. I am just trying to get my head around the financial and business side of things. I understand that any profit would be liable for capital gains tax - however would this be charged to us as individuals, or should we create a business that deals with everything. I am also currently self-employed and would want as little knock on effect to my current financial state of affairs as possible.

My previous thoughts were that we would just buy the property and become joint owners, work on the house, then sell then pay off the capital gains tax - is this too naive?!?

Further more, would becoming a business mean that expenditure on the property (e.g. new kitchen/bathroom - which obviously increases the value) would be able to be offset against the profit liable to CGT? Or is this possible to do if the investment is purchased as individuals? Is CGT payable through self-assessment? Or would it be arranged through the conveyancing at the point of sale!? Plus as there would be two of us, does buying it as individuals reduce the amount payable as CGT as it would be owned jointly? Ergo, 40% off a 50 grand profit would be 20k in tax, but the same 50k profit shared between two of us reduces the individual gain to 25 grand profit each - therefore halving the CGT?

Sorry for the sheer volume of questions, like I said, I am still at the explorative stage and want to know what I would be getting myself into!

Many thanks,
Dave

m00m00

spam. (post 2)

a more sensible answer is, the key to property developing is buying the property at the right price, and being in a rising market.

the latter just isn't the case, so you would absolutely have to factor in that prices will be flat or even reduced from current market prices when you come to sell. Don't fall for the property !!!!!! programmes on tv which were all filmed during a boom.

SquatNow

search2007 wrote: »

In reply to the original post in this thread, one option if having renovated a property and found difficulty selling it, is to sell to a professional housebuying company like the one I represent - www.quickmovenow.com.
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SquatNow

Heres a quick tip for you:
These programs on TV, where they buy a house do it up and sell it at a profit three months later... they're BS... OK? The profit they make is entirely from HPI... if they had simply left the property alone and sold again three months later they would have made the same profit.

You can't make money by doing the place up. Doing it up only increases it's value by the amount of money you spent doing it up... because anyone could have bought it and spent that same money. Even a builder will be no better off doing it... yes if they do all the work themselves they may save employing and paying another builder, but the most they can save that way is the value of the builders time... in which case they could just get a job working for someone else.

Those shows are "flipping", where people buy at auction where prices are cheap and then sell through estate agents. They are simply speculating rather than actually doing anything productive. Any money they "make" is simply at the expense of others... they enrich themselves by harming people who ARE being productive.

Why don't YOU do something productive, like get a job, instead of hoping productive people will stuff money into your pockets.

Final Note: Property prices have started coming down now, so you wouldn't make any money out of HPI anyway, so CGTax is irrelevant.

Topic Closed

pamaris

Ditto m00m00.

lewis-dp

SquatNow wrote: »

Heres a quick tip for you:
Why don't YOU do something productive, like get a job, instead of hoping productive people will stuff money into your pockets.

Topic Closed

Thank you for your valued comment SquatNow, you complete and utter !!!!!!. You have no incite into who I am. The idea of trying to do something like this is to help take my father-in-law out of factory work which has already caused him to lose the hearing in one ear, as well as being a complete drain on his quality of life.

But its my mistake, cos I thought this was an advice forum, not just something where you're overrun by spam and obnoxious egocentric idiots.

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m00m00 and pamaris,
Thank you (and sorry for the outburst), I have recently been made aware of a specific property that I believe has a lot of potential, so yes, I understand about buying things at the right time/price etc. I just don't want to get caught out on the tax front.

mlz1413

hi lewis-dp, having read the responses i would advise you to talk to an accountant, it may cost you a few hundred pounds to get your advise but it will be personal advise for your situation and could save you thousands!

ask the accountant what sort of work they do, if they are a tax specialist, if they deal in the property side. the best one may not be the cheapest, but you don't want someone at £10 ph who will just compile a list of money in, money out. (also pay for one year and you may well be able to do it yourself from then on)

david29dpo

You will get the jealous replies. i have done this for years and make a good living. The biggest problem now is finding the properties. Do that and worry about the rest later!

BobProperty

SquatNow wrote: »

You can't make money by doing the place up. Doing it up only increases it's value by the amount of money you spent doing it up... because anyone could have bought it and spent that same money. Even a builder will be no better off doing it... yes if they do all the work themselves they may save employing and paying another builder, but the most they can save that way is the value of the builders time... in which case they could just get a job working for someone else.

Why don't YOU do something productive, like get a job, instead of hoping productive people will stuff money into your pockets.

Funnily enough I know people who DO make a living out of "doing" places up. People will pay more for the finished product. It doesn't always happen and a lot of wannabes get it wrong but your generalisation is incorrect. Also, what is the difference between me doing the work and making money when I sell a property and someone else paying me to do the work? This doesn't seem to compute in SquatNowWorld. Is my work any more valuable because someone employed me? Isn't repairing and improving the housing stock "productive"?

Conrad

Lewis the people I know who are still making money are VERY creative, a world away from the 'how to' TV shows.

Example; Very good freind buys townhouses using B2L mortgages (on the assumption he will let them in the ordinary way on a 6 month ATS), however he then lets them as 'rooms' to Poles.

Each room yields about £100 per week gross, and a 3 bed townhouse generally has 5 tenants. No written agreements, they just pay cash weekly which he collects - he is a tiny long distance runner btw, not a beefy minder type.

His last house cost £200,000 plus some improvements and purchase costs. The yields he generates are usally above 10%, and remember thats all cash. I understand such people declare about 1/2 the rent to the tax man.

He does sometimes get a non payer, or rowdy tenant but these are quickly dispateched with the aid of a couple of mates.

Another trick they use is to cash tenants cheques as cash converters to avoid Tax.

Not my recommendations, just how it is in the real world.

lewis-dp

Thanks guys... and well said Bob!