starting renovation to sell

markyyyyyy

I've always wanted to purchase a property that needs renovation (nothing structural) and sell on.
I understand that people say that homes under the hammer is not a realistic representation of buying to renovate and sell.
Under 'real life 'situations, has anyone got examples of whether it is feasible to make a good profit?
I would be doing the works myself except gas/electrics, to keep costs down.
What other fees would be involved for me? it would be my first property to renovate, and i currently own a property with a mortgage.
Would i be subject to CGT or just income tax?
I understand auctions are very competetive - are there good buys on the normal market for houses in need of 'gutting' - they all seem to be at auction?
Any further information or advice would also be much appreciated
Thanks

AdrianC

Broad headline costs...
Purchase costs (inc SDLT).
Finance costs.
Materials and labour costs.
Sale costs.
Can you do plastering? Can you do roofing? Can you fit windows? Are you aware what needs to be signed off by building control and what doesn't?

If you're buying with the intent of improving and reselling, then that would indeed be a business activity, according to HMRC's badges of trade, and you would be looking at income tax on your profits.

"Projects" can go through EAs - but you can bet they'll tend to go quickly, because EAs know the people who are likely to offer decent, sensible money with little hassle. There's no point in marketing them to the general public.

So that leaves you with repossessions, and with the stuff that's gone to auction because none of the usual suspects think the numbers make sense. Remember that your costs are inevitably going to be higher than somebody in the trade, unless you're happy making a smaller margin. Then ask yourself why it makes sense for you to be paying more to start with...

FreeBear

Add to that list, waste disposal costs.

If you end up getting a repossession, you may well find the previous occupants had left it crammed full of rubbish and/or there could be asbestos contamination. Unless you are a cash buyer with substantial reserves in hand, I'd say forget it.

sheramber

What profit, if any, you made from a sale would depend on the quality of the work you did.
How sellable the house would be - location, price etc.
How  long the  renovation took and therefore how long you were paying interest on any money borrowed and the amount of interest you had to pay.
The cost of any tradesmen you needed to use.
A lot of number crunching needed.