Do I pay CGT on an investment property?

[Ravey1]

Hi all

I have been buying property for a number of years now and renovating them and selling them on but I always live in them to avoid paying CGT. As the market is not great at the minute for what I want to do I decided to go for new builds off plan instead as I can make the same profits without the work and hassle of renovation.

I have just bought a new 2 bed apartment which will complete on 15 Dec and will hopefully be rented out from Jan next year. I am only keeping the property for 2 years as an investment and then I will sell on for a profit.
I have been told by my mortgage advisor that I will not pay any CGT as long as I sell within 3 years. Is this true?? He mentioned something along the lines of " If i owned the property for 10 years and make a profit each year then I dont have to pay CGT on 3 of those years.Basically whichever years I made the most profit I could choose those 3 years to not pay CGT" He said as I will be keeping the property for only 2 years I just nominate both those years to not pay any CGT. Again is this true. I plan on doing this every couple of years but if I have to pay CGT then I wont bother.

The apartment is being bought for £124,995 and should be worth £150 min in 2 years. I am buying it jointly with my girlfriend. The rental income will be £575pcm and the mortgage payment will be £440pcm. I am not bothered about making a profit on the rental income as I am looking to make a good profit from the sale.

Any help or advice would be greatly appreciated.

Thanks :)

[Tax Accountant]

Hi all

I have been buying property for a number of years now and renovating them and selling them on but I always live in them to avoid paying CGT. As the market is not great at the minute for what I want to do I decided to go for new builds off plan instead as I can make the same profits without the work and hassle of renovation.

I have just bought a new 2 bed apartment which will complete on 15 Dec and will hopefully be rented out from Jan next year. I am only keeping the property for 2 years as an investment and then I will sell on for a profit.
I have been told by my mortgage advisor that I will not pay any CGT as long as I sell within 3 years. Is this true?? He mentioned something along the lines of " If i owned the property for 10 years and make a profit each year then I dont have to pay CGT on 3 of those years.Basically whichever years I made the most profit I could choose those 3 years to not pay CGT" He said as I will be keeping the property for only 2 years I just nominate both those years to not pay any CGT. Again is this true. I plan on doing this every couple of years but if I have to pay CGT then I wont bother.

The apartment is being bought for £124,995 and should be worth £150 min in 2 years. I am buying it jointly with my girlfriend. The rental income will be £575pcm and the mortgage payment will be £440pcm. I am not bothered about making a profit on the rental income as I am looking to make a good profit from the sale.

Any help or advice would be greatly appreciated.

Thanks :)

(1) You could be facing serious tax problems if your activities came to the attention of tax authorities and they believed that you were engaged in running a business as a property developer. This depends on the scale of your activities looked upon as a whole. If so, you coyld be liable to income tax and NIC on your profits and not Capital Gains.

(2) According to HMR&C, ''you are denied private residence relief if you acquire a dwelling house and/or spend money on it in order to realise a gain on its disposal''.

(3) Either the mortgage advisor was talking about laws applicable in some distant foreign country or you don't understand a word of English.

You need some serious advice from a professional.

Ramnik

[Ravey1]

(1) You could be facing serious tax problems if your activities came to the attention of tax authorities and they believed that you were engaged in running a business as a property developer. This depends on the scale of your activities looked upon as a whole. If so, you coyld be liable to income tax and NIC on your profits and not Capital Gains.

(2) According to HMR&C, ''you are denied private residence relief if you acquire a dwelling house and/or spend money on it in order to realise a gain on its disposal''.

(3) Either the mortgage advisor was talking about laws applicable in some distant foreign country or you don't understand a word of English.

You need some serious advice from a professional.

Ramnik

It is not my intention to deceive the tax authorities, which is what you seem to be implying! I am asking for your advice to enable me to go about things the correct way.

I was born in england, speak very good english, and do not appreciate your attitude.

Since posting this last night I have now aquired the correct information.

1) I have a full time job and do not class myself as a property developer as this in its self would be a full time occupation. I mearly enjoy doing my house up and "DO NOT REALISE" any gain on the property. Full Stop.

2) The advice was given to my advisor by his accountant who works in London. It is a little known rule which he was only told about this year after he himself had sold property in the past and paid CGT.

3) The word "could" is spelt like this "could"

[jingle68]

Hi all

I have been buying property for a number of years now and renovating them and selling them on but I always live in them to avoid paying CGT. As the market is not great at the minute for what I want to do I decided to go for new builds off plan instead as I can make the same profits without the work and hassle of renovation.

I have just bought a new 2 bed apartment which will complete on 15 Dec and will hopefully be rented out from Jan next year. I am only keeping the property for 2 years as an investment and then I will sell on for a profit.
I have been told by my mortgage advisor that I will not pay any CGT as long as I sell within 3 years. Is this true?? He mentioned something along the lines of " If i owned the property for 10 years and make a profit each year then I dont have to pay CGT on 3 of those years.Basically whichever years I made the most profit I could choose those 3 years to not pay CGT" He said as I will be keeping the property for only 2 years I just nominate both those years to not pay any CGT. Again is this true. I plan on doing this every couple of years but if I have to pay CGT then I wont bother.

The apartment is being bought for £124,995 and should be worth £150 min in 2 years. I am buying it jointly with my girlfriend. The rental income will be £575pcm and the mortgage payment will be £440pcm. I am not bothered about making a profit on the rental income as I am looking to make a good profit from the sale.

Any help or advice would be greatly appreciated.

Thanks


I was born in england, speak very good english, and do not appreciate your attitude.

So much for 'appreciating' any advice!!

Ravey1, you may speak good english but your understanding of written english is poor, Ramnik was offering advice,not having a go at you!

[Tax Accountant]

It is not my intention to deceive the tax authorities, which is what you seem to be implying!

Are you a bit jumpy? I have implied no such thing. I suppose it is easy to read into something what one wants it to read rather than what it actually says. Deceiving tax authorities does not have to be only intentional.

I am asking for your advice to enable me to go about things the correct way.

Really? You could have fooled me.

I was born in england , speak very good english, and do not appreciate your attitude.

I wonder who is the one with an attitude?

Since posting this last night I have now aquired the correct information.

Could it by any chance be ''the mortgage adviser's accountant in London in possession of little known rule'' who told you that the information you have now acquired is correct?

1) I have a full time job and do not class myself as a property developer as this in its self would be a full time occupation. I mearly enjoy doing my house up and "DO NOT REALISE" any gain on the property. Full Stop.

So much for having acquired the correct information.

2) The advice was given to my advisor by his accountant who works in London. It is a little known rule which he was only told about this year after he himself had sold property in the past and paid CGT.

I bet 'the accountant who works in London' is guarding this 'little known rule' like a secret treasure.

3) The word "could" is spelt like this "could"

Tri replaying to litraly thozands of leters free of charg and chek your own spelings furst (highlighted in Blue) before critisizing others.

Your quote: ''Any help or advice would be greatly appreciated.''

As pointed out by Jingle 68, ''so much for appreciating any advice''!! With appreciation like this, what more can one wish for.


See replies above in Red.

Ramnik