Deductions for nominal salary and mortgage interest?

[lloydy]

1) I am in the process of renovating a property, which is entirely in my wifes name. She does not work, therefore am I right to assume that if her full free pay would be deducted from any profit we make?

2) I recently had an extension on my home property, which meant I got a £45000 top up on my mortgage. As I intended to get in to property I never bothered paying this £45000 off when I was in a position to but bought the house I am renovating for cash. I know if I had off paid off the mortgage and then bought the new house witha mortgage the interest would have been tax deductible, however can I claim some or al of the interest on my home mortgage.

3) Lastly!!! How much is the tax rate on the profit of a property that you renovate and then sell on?

[TaxationPete]

Initially I would have said that as the property is solely in her name then the profit will be taxed as if it was her normal income and income tax will be charged at the appropriate rate and use her tax allowance ( code ) the 20% and or 40% tax depending on the size of the gain. Now your wife should be registered as self employed with HMRC.
I note you refer to profits we make, you don’t she does. Also the funding for the purchase may have come from a joint mortgage so that gets complicated. Who is the nominal salary for. Your wife can not claim a salary, she is the property developer. If you claim a salary you will have to be self employed and pay Income tax and NI at ‘your’ marginal rate. Normally the cost of financing a purchase and the associated costs and interest are a deductible but have to be traceable and just re-directing your perhaps joint funds is a bit wholly. You should be OK but I think you should seek professional accounting guidance to make your accounts credible with HMRC. Regards Peter

[lloydy]

Thank you very much for your help mate. Is it seen as wages then, as if she was a sole prop and not capital gains tax?

Would you go for any accountant, do they all deal with property style accounts?

Thanks again in advance, I notice you give lots of advice on here.

Lloydy

[TaxationPete]

Property development/refurbs is a trade and attracts NI and Income Tax if you were to keep one and rent it out for a sensible period say 12 months an then you sold it, it would be a CGT issue on the sale and Income Tax on the rental income. Ask arounf and find a smaller firm accountant that does property type accounts for other clients. Regards Peter