Best way to flip houses - tax

[Deleted User]

Jeremy535897 said:

That's why I said "you are very unlikely to be liable to income tax either". The artificial transactions in land rules are disapplied in cases where the property is genuinely used as a main residence, so HMRC has to show a genuine trade, and a sale every 18 months or so is not really evidence of that. HMRC has taken the odd high profile case, but usually in circumstances where there are huge development profits and the use of the property as a main residence is sketchy. I would view the comment in the link you referenced as over pessimistic.

I would have to agree entirely. I have a friend who did exactly this - bought renovated and sold at least eight properties until they finally settled. We thought that they were completely mad (especially with four children) as, on many occasions, the majority of the house resembled a building site. 

HMRC did ‘pick up’ for investigation into whether they were operating a trade. It was dropped immediately upon being persuaded, with evidence, that there were no alternative residences held at any time during this fifteen year journey. 

mcdevmc

Thank you so much for your advice... It's great to have a full score of what's acceptable and what's not.. definitely food for thought and I promise no shouting from the rooftops... Thank you

Jeremy535897

I suggest you have a good look at the guidance from @noitsnotme as there are several points to understand that don't come out from watching Homes under the Hammer. The most important point is the construction industry scheme. If you have a mindset that is "I am a property developer" then if you use subcontractors like plasterers you need to register as a contractor with all its consequences (and that in turn is likely to mean you are trading). If you have the mindset that is "I love doing up properties I live in and I get bored of living somewhere for too long" then you should be all right.

Remember too that most of the profits made by people on Homes under the Hammer are on the back of a rising market. It may well often have been the case that they would have made more by simply living in the house for a year and doing the absolute minimum. When you buy a house because you want to live in it, you will be tempted to overspend on it and over-personalise it, because your judgment is clouded.