Renovating & Selling Advice

Ben207

I am about to purchase a property to renovate and sell on. I am currently renting and will carry on renting whilst the renovation takes place. I will then sell the property and hopefully make a decent profit. I am a first time buyer with this property but will remain in my rented house whilst this all happens. Are there any tax/mortgage benefits from moving into the renovated property? Any advice would be most welcome.

hazyjo

Presume buying as a business?


Presume you'll hang on to it for 6+ months before selling, unless to cash buyers? Must have very cheap rent for that to make sense!


If no to those two questions, why not?


Lastly, have you been watching lots of Homes Under The Hammer? :think:

FreeBear

hazyjo wrote: »

Lastly, have you been watching lots of Homes Under The Hammer? :think:

One thing HUTH don't mention is stuff like capital gains tax and the costs involved in selling a property - Most of this will eat in to any profit to be made from buying, renovating, and then flipping.

A house a few doors down from me was purchased cheap after the previous owner passed away. The new owner spent quite a bit of money removing fireplaces & chimney, rewiring, heating system, & plastering. Then slapped a bit of grey paint on everything, installed a shiny new kitchen, and then tried to flip it after adding £100K to the price he paid for it. Over a year on, no takers, and he has dropped his price by £45K.

foxy-stoat

Ben207 wrote: »

I am about to purchase a property to renovate and sell on. I am currently renting and will carry on renting whilst the renovation takes place. I will then sell the property and hopefully make a decent profit. I am a first time buyer with this property but will remain in my rented house whilst this all happens. Are there any tax/mortgage benefits from moving into the renovated property? Any advice would be most welcome.

If your only asking these questions now then I would hold off until you have researched what you are planning on doing.

Tax implications - yes there will be if this is not going to be your main and only residence.
Mortgage implications - yes - you probably wont be able to sell it until after 6 months and if you require a mortgage then you may struggle to get a residential mortgage if you wont be living in it and it will be empty.

Good luck, you will need all of it.

sal_III

So you are going into a business of flipping houses in one of the worst possible moments from property market perspective and zero knowledge on the matter (apart from by the sound of it binge watching Homes under the hammer).

Seems like a sound business plan...

GDB2222

I agree. If you do this at a time when house prices are rising, you are much more likely to make a profit.

hazyjo

FreeBear wrote: »

One thing HUTH don't mention is stuff like capital gains tax and the costs involved in selling a property - Most of this will eat in to any profit to be made from buying, renovating, and then flipping.

I wasn't giving it as advice, it was more 'please tell me you haven't been watching HUTH and think it looks like a fabulous idea...'

need_an_answer

What do you term to mean a decent profit?

How have you chosen the property that you are purchasing,have you looked at it in terms of "development" and in a "gain"sense or as a place that you would live in once completed?

once you have taken your expenses into account both in terms of what it cost to buy the property,renovate it and then sell it how much do you anticipate you will be in profit?

Over what timescale are you completing this project?
Are you planning on doing the work or are you contracting out to trades?

I love nothing more than an afternoon with Lucy and Martin and more latterly the other two who seem to have taken on the mantle that is HUTH....but in all seriousness you wont get rich and certainly not quickly.

What a lot of purchasers now find is that there just isn't the increase in equity of the property during the timeframe of the refurb to push the price up,which to a point is what used to happen maybe 10 years ago when the majority of these house flipping TV programmes were filmed.

The bottom line nowadays is you purchase a property you do it up and you sell it for sometimes no more than what its cost you to renovate...and that's without taking a salary for doing it.

You are keen to ask about what benefits there are or incentives whilst doing this...I cant off the top of my head think of any other than the note of caution that most councils now have removed the council tax benefit of exemption for empty property and some have even introduced a doubling of council tax once the property has been empty for 12 months. You could quite easily find that it takes a year to renovate and sell so you will need to be clear on your councils approach to charges so it doesn't come as a surprise and an unwelcome expense.

Going forward,once the property is renovated you might find you need to live in it just to help you recoup some of the expenses or at least cut the need for paying rent on your current property,and CT and utility bills on both properties.

Slithery

Don't forget that as this is a development you will also be subject to income tax on any profit you do make (at anywhere between 20% and 45%).