CGT or Income Tax

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    CGT or Income Tax

    Hi All,

    I'm looking at going into buying and letting/selling property but wanted to understand some basics before I go all guns blazing!

    If I was to buy a second home (Currently own one with my partner) with the intention of 'making money', renovate and sell it, would that be classed as trading profits and income tax would be due at the relevant rates? And all expenses would be deducted from the sales price to reach my income?

    Whereas if I ended up renting the finished product and then selling it at a later date it would be CGT? Could we offset any of the expenses that wouldn't be allowed for CGT against anything?

    Thanks In Advance!

    If you buy a property, move in, and live in the property as your principal residence , the capital gain from your period of stay is exempt for cgt. If you have 2 homes at the same time, only one home will be recognised as your principal residence

    If you buy a property to renovate and re-sell , your gain is treated as trading profit and added to your work income which is taxable at 20% or40% rate.

    If you buy a property , renovate and rent out for a couple of years, the gain from sale of property is treated as capital investment gain and after deducting £11,100 capital gain personal allowance, may be charged at 18% or 28% depending on the rate for job income.



      By putting the asset into the right trust would save you from worrying about any taxation's. Hundreds of landlords existing and new are now waking up to the potential savings of the right tax planning by using trusts. No income tax if you let it out and no capital gains tax if and when you sell it. Also if anything happened to you, your family would be protected form inheritance tax.

      If your not up to date with the new tax changes that will be affecting landlords then you should research them or ask an expert as it could be life changing without the right type of planning.


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