Do I have to pay tax if I buy and sell my property quickly.?

Question

I have the opportunity to purchase my council property at a good price. I am aware of my obligations to the council but if I were to renovate the property and sell it within a few months at a profit would I be taxed? This would be my only property.

Answer 1

Yes.

Answer 2

As this is your first time buyer property and not a business you won't have to pay and gains taxes. You are buying your home, the one you already live in! Not snapping up ten houses in order to get rental income!

So no the answer is you will not be taxed on any increases.
you can't sell it for 2 or 3 years as this is in the Right to Buy Scheme rules, then the profit is yours when you finally do sell.
You wont be taxed on any increases in it's value, because it is your home, and never was a buy-to-let mortgage or business.

When you purchase the home, it will be at a discounted rate of up to 33% maximum, usually gained at 1% per year. This discount is yours and so are the profits.

Now you must consider that buying the property will cost you arund £1500 in fees to solicitors/searches and surveys, this is not a lot, but if you later sell it, you will pay a similar amount again, plus you will need to make up a sellers pack and also pay for the same on the new property, the estate agent will take 2% of the value too, so all together sellig this one to move on will cost £4,000 approx (in a few years from now when you can legally sell it).

Answer 3

"My Name's MUD" has the best answer that I can see. You don't need to pay any tax.

In the UK you only have to pay capital gains tax on a second house (or third, fourth etc.). You can buy and sell the house you live in without paying capital gains tax.

I'll trust MUD that you can't move for 2 or 3 years under the Right To Buy scheme, but you said oyu're aware of your obligations to the council anyway.

Answer 4

If the property is in the US, IRS rules state that if you lived in the property as your primary residence for 24 of the last 60 months, than ANY profit UP TO 250K will be TAX FREE. If you sell an investment home (non owner occupied) or any other type of real estate that can not be considered a primary residence then you will be taxed on the GAIN.

If you plan to re-invest your proceeds on a TAXABLE sale, you can file a 1031 Exchange form declaring to the IRS that you will reinvest in real estate with the proceeds, the income tax is not applicable (provided you meet the guidelines and regulations for the exchange)

Hope this helps,

Answer 5

What other posters have not mentioned is that you will have to pay all the discount the council gave you if you sell up before the discounted time is up.I do'nt know what your council rules are,but it is usually on an annual basis and decreases as the years progress.You will not be liable for any taxes at all as it is your home.

Answer 6

If the property is your sole residence there is no capital gains/income tax payable on the proceeds, whether a profit or not.

So long as you can prove that it is your residence, council tax bill, utility bill, mortgage statement etc, you will be OK.

Answer 7

Not if its your sole residence. But you will be subject to Capiatal Gains Tax if its over a certain amount

Answer 8

yes, you'd have to pay capitol gains tax unles you re invested the money in another property within a certain time period, or if you're over the retirement age, you would not be taxed on it.

Answer 9

Yes, you can't get out of paying taxes, it will happen at the closing.

Answer 10

simple answer is yes