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House price correction and rent correction


Freki
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1 hour ago, adarmo said:

Pun intended? Technical accounting would I think be fairly tricky to automate but basic stuff not so much and certainly data reports and business information is well on the way. Computers even write their own code these days. 

Definitely get a much higher level of satisfaction working on your own place but I have always got a buzz out of doing something for a client to a high level and getting positive feedback. However, nothing beats the feedback you get time and time again when you do something to your own place and people comment on it when they come over. 

That is the big question re capital gains. However, if they did go down that route let's say you spend £100k on works and make £200k overall, you'd have CGT at £100k. If you're married you can use both CGT allowances of £12k each so only pay cgt at 18% (assuming both lower rate tax payers) on £76k = £13.68k which is not an awful effective rate on £100k. If you actually got out of bed every morning to go an earn that money you'd be time poor AND suffering an average rate 33.5%. In addition I'd be much more relaxed about flipping houses. However, being married may frustrate this strategy since married couples only qualify for PRR on their marital (single) home. If you are unmarried you can buy a property each and provided you meet the criteria enjoy two lots of PRR. 

But, if your sole objective is renovating to sell on for profit then HMRC would determine that as a trade and the profit as income and expect you to pay income tax on that as a sole trader, or corporation tax if the property had been purchased in a company. The later may be useful since you can obtain capital allowances for plant and equipment relating to the work but even a tax efficient cost is a cost.

As things stand you are fine so long as HMRC do not determine that you are trading. It is therefore important to have some means of supporting yourself other than selling on a completed property and be able to justify the purchase and subsequent sale. Flipping property every couple of years might well attract their attention, particularly if there are large gains. This is detectable because all property is within the scope of CGT in the UK. Upon a sale the appropriate tax reliefs are applied and therefore HMRC can clearly see how much relief you've been benefiting from. They do have other stuff to do and bigger fish to fry of course but I could imagine few things worse than an HMRC tax investigation. There's no hard and fast test really to determine what is trading in this scenario but if the intention is to purchase and sell on for profit that would tick the box. The alternative here might be to let the property and then it could be determined as an investment property and therefore subjected to the CGT framework and not the trading one. Obviously the rental income could be taxed as income under section 24.

Ultimately you should take professional advice but I would be interested to hear how you get on :) 

The bean counter comment was just a flippant remark that flash backed the conversation i was having with my brother in law, he was sure there will always be a demand. If software and hardware can mimic human thinking and make the same decisions 99.9% of the time no job is safe.  Although the guy can`t even curb his wife's spending on rubbish every month and pointless subscriptions and extended warranties let alone predict the future.  They were curious as to why i had 3 holidays last year and don`t work and They can`t afford even one while he slogs it on the train to london everday  ?

It`s ironic that so many threads on here discuss high earners but then they have bugger all left at the end of the month, There are some good posters on here. 

Surely a single man moving house every so often could not be deemed as trading as i would be only owning one house at any one time i imagine it would be pretty difficult to prove anything untoward was going on. obviously if they change the goal posts things may be different. obviously i would still have some kind of employment to live on while this work is ongoing. 

any planning permission gained for new dwellings would come under the main home allowance also i believe should just the land be sold off. 

 

 

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9 hours ago, longgone said:

The bean counter comment was just a flippant remark that flash backed the conversation i was having with my brother in law, he was sure there will always be a demand. If software and hardware can mimic human thinking and make the same decisions 99.9% of the time no job is safe.  Although the guy can`t even curb his wife's spending on rubbish every month and pointless subscriptions and extended warranties let alone predict the future.  They were curious as to why i had 3 holidays last year and don`t work and They can`t afford even one while he slogs it on the train to london everday  ?

It`s ironic that so many threads on here discuss high earners but then they have bugger all left at the end of the month, There are some good posters on here. 

Surely a single man moving house every so often could not be deemed as trading as i would be only owning one house at any one time i imagine it would be pretty difficult to prove anything untoward was going on. obviously if they change the goal posts things may be different. obviously i would still have some kind of employment to live on while this work is ongoing. 

any planning permission gained for new dwellings would come under the main home allowance also i believe should just the land be sold off. 

 

 

There are some excellent posters on here I agree. I've come to the conclusion the most people on very high salaries aren't there just because they're smart but because they love money and as soon as they get it they've spent it. Some of our sales team seem to spend the money before they get paid on the deal judging by the pointless emails some of them send me. 

Good effort on the holidays! Bugger commuting to London :)

With the tax issue on properties the guidelines are simple, if three property was bought simply to flip then it is a trade and therefore taxable. However,  if you bought a house and relocated it intending to live there,  and then moved that isn't trading. All i would encourage you to do is read through the HMRC (and other) guidance on this and then maybe speak with a tax accountant (who will cover their **** like mad these days... probably) and then make a decision. I would say though that if you're repeatedly moving house every 18 months for a decent capital gain then it may start to look a littleodd. https://www.rsmuk.com/blog/unexpected-tax-bills-for-property-flippers

The reliefs and allowances might well change but until that's enacted in a Finance Act nobody really knows and for now i don't think they've got anything planned. 

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"Brexit has wiped thousands of pounds off London rental growth, saving tenants up to £1,800 since referendum"

https://www.thisismoney.co.uk/money/buytolet/article-6622787/Brexit-wiped-thousands-pounds-London-rental-growth.html

From the link:

  • Uncertainty since the Brexit vote has hit demand for rental properties in London 
  • Combined with tougher tax treatment, this has slowed rental growth
  • Across the rest of the country rental growth has continued as normal 
  • Void periods have increased for landlords over the past three months 

 

Edited by BearlyBegun
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3 hours ago, adarmo said:

There are some excellent posters on here I agree. I've come to the conclusion the most people on very high salaries aren't there just because they're smart but because they love money and as soon as they get it they've spent it. Some of our sales team seem to spend the money before they get paid on the deal judging by the pointless emails some of them send me. 

Good effort on the holidays! Bugger commuting to London :)

With the tax issue on properties the guidelines are simple, if three property was bought simply to flip then it is a trade and therefore taxable. However,  if you bought a house and relocated it intending to live there,  and then moved that isn't trading. All i would encourage you to do is read through the HMRC (and other) guidance on this and then maybe speak with a tax accountant (who will cover their **** like mad these days... probably) and then make a decision. I would say though that if you're repeatedly moving house every 18 months for a decent capital gain then it may start to look a littleodd. https://www.rsmuk.com/blog/unexpected-tax-bills-for-property-flippers

The reliefs and allowances might well change but until that's enacted in a Finance Act nobody really knows and for now i don't think they've got anything planned. 

sounds like materialistic gain is the driving force behind them chasing the money. I really do struggle to find things to spend money on and then it would probably take a week before i decide to buy something.  i suppose to sales guys there is always another deal so they just blow the lot not sure how many handbags expensive watches and oled tv`s you need mind you. i have done the flash car thing already not going back there. 

well i guess i may as well travel a bit everyone else is doing it. it`s no longing desire of mine but might as well spend a bit not gone too far yet but fancy a long flight somewhere this year. There are really good deals out there if you know how to play the system.

Seems a grey area that main residence tax relief, probably proving living there with bank statements bills and other evidence would be enough to convince you actually tried to live in it, probably 2-3 years residence would be enough. 

as i stands i am not seeing much of interest to buy anyway so its all a pipe dream at the moment. ? 

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3 hours ago, longgone said:

sounds like materialistic gain is the driving force behind them chasing the money. I really do struggle to find things to spend money on and then it would probably take a week before i decide to buy something.  i suppose to sales guys there is always another deal so they just blow the lot not sure how many handbags expensive watches and oled tv`s you need mind you. i have done the flash car thing already not going back there. 

well i guess i may as well travel a bit everyone else is doing it. it`s no longing desire of mine but might as well spend a bit not gone too far yet but fancy a long flight somewhere this year. There are really good deals out there if you know how to play the system.

Seems a grey area that main residence tax relief, probably proving living there with bank statements bills and other evidence would be enough to convince you actually tried to live in it, probably 2-3 years residence would be enough. 

as i stands i am not seeing much of interest to buy anyway so its all a pipe dream at the moment. ? 

I've never been hungry for money beyond a comfortable salary and a fairly modest lifestyle. 

If you lived in the property for a period of time that would certainly count in your favour. Since it wasn't purely to flip. I think though a regular pattern of buying and selling would eventually catch up with you and then you'd be best living in a nice little place somewhere and buying and selling through a registered business. Get VAT registered and there's a few benefits to that but you'd be back on the grid so to speak. 

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