Flipping a property

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    Flipping a property

    My son and I are thinking of buying a property together and renovating it. We were intending to rent it out but now are thinking about just selling it again once work is finished. If we purchase property in three names (our’s and his partner’s), we would get three capital gains allowances is that correct? Or are there different rules if you are flipping a property and not renting it out first. I read an article that discussed being considered trade and therefore not eligible for capital gains exemption but that tax would be calculated differently The term that come to mind is active income. Anyone here have any advice, knowledge of this? Thanks.

    #2
    If the asset is held for less than 12 months, the profit is added to your job income and charged under income tax. at 20% or 40%

    If the asset is held for more than 12 months, the profit minus capital gains allowance is charged under capital gain tax at 18% or 28%.

    Comment


      #3
      Is the 12 month restriction a rule or a rule of thumb?
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        Actually I cannot find any definition of minimum holding period of 12 months for capital gain tax on hmrc website..

        There is a liability to capital gains tax after sale of an asset if the gain is greater than the annual free allowance of £12,500.

        If the gain is achieved within 12 months, the taxable capital gain is charged at income tax rate ( 20% and 40%) .

        If the gain is achieved after holding more than 12 months , the taxable capital gain is charged at cgt rate ( 18% and 28% ) for property and (10% and 20%) for other types of assets ( Shares) and business assets ( 10% for entrepreneurs retirement after 3 years or longer ? ) .

        Comment


          #5
          Property investment and property development are two distinct businesses.

          Many developers use company structures to be more tax efficient and it's worth a good discussion with an accountant.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment

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