Investing in property to flip with family member

Chillipie

We are thinking of investing in a property to do up to help boost my mother’s and my pension. She is of retirement age, I am a builder so we would share the profit. We don’t need to borrow as between us we have enough funds, can anyone advise me on the tax implications, we both own our own properties we reside in. 

Any advice would be gratefully received.

Section62

Chillipie said:

We are thinking of investing in a property to do up to help boost my mother’s and my pension. She is of retirement age, I am a builder so we would share the profit. We don’t need to borrow as between us we have enough funds, can anyone advise me on the tax implications, we both own our own properties we reside in. 

Any advice would be gratefully received.

Are you self-employed and VAT registered?

gwynlas

As above, you should register as a limited company with both of you as directors.

Bookworm225

as you are a builder then it will be very difficult / impossible for you to claim that this is an investment activity subject to Capital Gains Tax

it will be treated as a property development activity subject to income tax on the profits. That is probably a better outcome for you anyway as it makes it much simpler to define what is an eligible cost as much of the work may well be of "repair" (ie revenue, not capital) nature.

whether you and mother choose to do the development through a Ltd company or as SE comes down to checking your actual individual personal tax positions compared to the costs of operating as a company. 

Chillipie

Section62 said:

Chillipie said:

We are thinking of investing in a property to do up to help boost my mother’s and my pension. She is of retirement age, I am a builder so we would share the profit. We don’t need to borrow as between us we have enough funds, can anyone advise me on the tax implications, we both own our own properties we reside in. 

Any advice would be gratefully received.

Are you self-employed and VAT registered?

Yes director of limited company and VAT registered - my mother is retired 

Bookworm225

Chillipie said:

Section62 said:

Chillipie said:

We are thinking of investing in a property to do up to help boost my mother’s and my pension. She is of retirement age, I am a builder so we would share the profit. We don’t need to borrow as between us we have enough funds, can anyone advise me on the tax implications, we both own our own properties we reside in. 

Any advice would be gratefully received.

Are you self-employed and VAT registered?

Yes director of limited company and VAT registered - my mother is retired 

then you need to decide if the work is going to be through your company or not

if it is, what connection does mother have with the company and therefore a right to share any profit from that work? Is she a shareholder? office holder? employee?