Property Tax

Mootle

Hi All,


Anyone know best way to tax efficiency on buying second property. The aim is to do up and sell, but do I buy in my name only (20% tax payer) or jointly with Hubby (40% tax payer)? And if I save when buying, will I be penalised with capital gains when due to my lower rate???

00ec25

lets get one thing clear from the start - forget capital gain tax

you are buying with the clear intent from the outset to do up and sell. That means you are property developers and therefore are classed as "trading" and so the entire activity will be subject to income tax not CGT

how you split the costs and the eventual profit between the pair of you will depend entirely on what your respective shares are in this trading activity. If he takes anything out, or pays any of the costs incurred, he will have a share and would be liable at his tax rate of 40% on that share.

if your profits are big enough they may push you over into the 40% bracket anyway even if he has no share and you keep it all yourself.

sounds like you need to sit with someone and get detailed tax advice