If I buy a house and sell it quickly eg. after renovation for a profit, What tax would I pay?

Question

Also, If I were to buy as a company, ie set one up for the express purpose of buying and selling, would I waive some of the capital gains tax, or is this irrelevant?

Answer 1

It doesn't matter how quickly you sell it. If you turn a profit, you'll be taxed.

Answer 2

1

Answer 3

I am assuming you, like me, are in the UK. The rate of tax is, I believe, 40%. This is charged on the profit. To estimate your tax liability take all the costs (purchase/renovation/fees for connecting gas & other services/cost of fixtures & fittings left at the property/legal fees/ estate agents fees etc.) away from the amount you get for the property. The difference is your profit which is taxable at that mighty 40%.
With a limited company you still deduct all costs and you wouldn't pay Capital Gains Tax but this would be replaced by another company tax. I don't think there would be a saving here in the long run.
One way to avoid CGT is to live at the property for period of time as your main residence.
Still, if you make, say, £100K profit on a project that took, say, four months it's not bad...

Answer 4

If you are in the Uk, it is possible to set up as a property developer when you would pay income tax (Corporation Tax if you were a ltd company) on the profit made on sales of houses.
You would pay income tax at your highest rate, which would be the same rate as Capital Gains Tax if you were not trading in property. Plus, CGT has an annual exemption, which you don't get if you are trading. It all really depends on your personal cicumstances and how much work you intend to do on the properties.

Answer 5

All acording to the state you are in. The 1031 tax exchange is a great way not to pay taxes. keep all reciept's for referb and if you dont do 1031 then you pay capitol gains tax on the profit only. Your tax accountant can give you exact figures. Keeping in mind that you will be paying lots of fees to sell property also. You should only buy for 65-70 % of market value of home to make a decent profit but those are hard to find.

Answer 6

the only way to avoid capital gains (defer is a better word) is to do a 1031 exchange when you sell the property Take ALL of the proceeds and invest directly into another investment property. The most common type of 1031 exchange is a 3rd party. there are very tight guidelines for doing this so you should research it before listing the first flip. It is a great way to grow your money over time if you just keep reinvesting it and exchanging. Using a coproration does not help with the defering of gains.

Answer 7

As a Mortgage Broker from Edmonton what I tell clients who want to Flip homes is the biggest impact on the profit will be the payout penalty of breaking your mortgage. In Canada if you are flip a principle residence you would not have to pay Capital gains as long as you re-invest the money into another property within 6 months.

Flipping properties looks easy, but has a lot of hidden pitfalls. If you have no experience doing this I suggest buying a lot of books at least then you will be able to make an educated investment.

Answer 8

If you buy and sell on a personnel basis the capital gain is base on your personnel tax year,
if you do it on a corporate plat form you can deduct expenses against your corporate tax's of cause the tax is higher on a corporate level you have to consult your local tax guru

Answer 9

I think you'd have to pay capital gains whether as a company or private citizen.

You really need to consult a professional tax accountant for advise on how to minimize your tax burden.

Answer 10

The only non-local tax (no idea where you are) would be capital gains. Companies are not exempt from capitol gains.