converting house into 2*flats - tax help

[rich31]

can anyone help me with regards to the tax implications of converting a house into 2 flats
i intend to buy a house using a mortgage for 300000 spend 50000 for conversion and sell flat A 250000 and flat B 200000 .

i. is mortgage best way of funding project or set up a company and use businness loan?
ii. what tax would i have to pay once both flats were sold?
iii is there any ways of reducing tax?

many thanks, hope someone can help a complete begginer!

[Tax Accountant]

can anyone help me with regards to the tax implications of converting a house into 2 flats
i intend to buy a house using a mortgage for 300000 spend 50000 for conversion and sell flat A 250000 and flat B 200000 .

i. is mortgage best way of funding project or set up a company and use businness loan?
ii. what tax would i have to pay once both flats were sold?
iii is there any ways of reducing tax?

many thanks, hope someone can help a complete begginer!

Which is the best method of financing the purchase depends on the interest rates charged by the lender. I would imagine that a business loan would be more expensive than a residential mortgage or a ''Buy To Let'' mortgage.

Tax would depend on whether your proposal is a business or an investment. On the basis of what you have said, you could be treated as a property developer, ie a business, and taxed to Income Tax and NIC (or to Corporation Tax if through a limited company) rather than to Capital Gains Tax. It is difficult to go into detail as to the merits of each.

The best way to do as you plan is to buy a property as your residence, actually live in the property as your main residence and then explore your options.

With the sort of amounts you are talking about, I am sure you could afford to obtain proper professional advice.

Ramnik