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new member 1st post.
about to buy my first refurb project.
I still work full time,,,,can I set my CGT allowance against the expected profit?
No, afraid not.
CGT is for rental investments, not buy-to-sell.
Perhaps the clue is in the name CGT- Capital Gains Tax. A profit is not a profit until it is crystallized.
It depends on what the intention is. When you mention expected profit, this suggests you are looking at refurbishing a property to sell, as opposed to refurbishing a property to let long term to tenants.
The two different scenarios above attract two different tax positions. If you are buying to refurb and sell, then CGT is not applicable, and instead your profits would be subject to income tax and NI, as you would be classed as a “trader.” If you are buying to refurb and then let long term, then there may be the potential for offsets in the future against capital gains tax on sale, as by letting the property long term, you would be classed a property investor.
Although please note, this is all under the assumption you are purchasing individually as opposed to through a company.
Hope that helps and best wishes,
RITA4Rent (Rental Income Tax Advisors)
Specialists in Landlord Taxation
Recommended tax advisors of the Residential Landlords Association
Follow us on Twitter @Rita4Rent
clients (at) rita4rent (dot) co (dot) uk
You don't state whether you own any other properties. If not, the refurb will likely qualify as your PPR and there will be no CGT due.
"You don't state whether you own any other properties. If not, the refurb will likely qualify as your PPR and there will be no CGT due."
Not necessarily Gary.
As Rita4Rent says - " It depends on what the intention is" - and then there are some strict rules that need to be met in order to qualify for PPR relief.
I may have misunderstood, but I understood that it is possible for an individual to purchase a property, refurb, sell and repeat in order to move up the housing chain without being liable for CGT as long as each property is their PPR. Although the intention is very similar to a trader the PPR status exempts CGT.
My apologies if this is now incorrect.
You're a really good man Gary so I know that you was only hoping that your advice would be helpful to this chap.
I learn from you and this time you've learned from me - and long may this exchange continue!
Hi, I live in a mortgaged property with family etc.
This will be the start of a transition from current rat race career to full time '' buy refurb sell'' career
Thanks for clarification.
So it's as per the tax specialist, RITA, said above.
Good luck with your new venture.