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  • Refurbishment

    Profit when flipping property

    Hello all, I am new to property and the forum. Would like to hear your opinions on a few points.

    with the new stamp duty on 2nd property, is property flipping worth it anymore? If we add the extra stamp duty, solicitors, agents, funding costs the profit margin suddenly because very little. Then after sale you have to pay income tax on the left over which could be at 50% tax rate depending on your personal income. Do you guys think it is better to buy-renovate-rent-then sell after 1-2year, that way you only have capital gain tax to pay? Is it better to buy it in a ltd or in your own name? I am hopng to do 1-2 project a year but my figures doesn't really add up with the extra costs Sad.

    chung

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    I do not wish to be unhelpful but all of these issues are all quite complex. The whole question of whether to buy as a company alone has lots of opinion. All of the issues you raise have been covered in the pages of this forum a number of times in great detail. Can I suggest that you do a search and you will quickly find a wealth of information.

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    Try adding up the figures again using buy, do up, remortgage, rent; using a company. See if that works better.  The maths will make the decision for you.

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    Hi Chung,

    Welcome to the tribe.

    This thread may assist your thinking:

    Buy to let vs. Buy to sell - trying to compare an apple to an orange​ 

    Also, if you decide refurb is the way to go, then this is a useful resource:

    Top 12 Property Tribes refurbishment resources for developers

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    It probably also depends greatly on how big a margin you're able to source regularly enough when flipping. They can be hard to find but I'm still able to find plenty of flips that work financially even with the extra 3% stamp duty - they are out there and london too. Just bought a 900sqft 3bed flat in sw19 london (standard vic conversion) - purchase price 315k was valued by the bank at 475k after a refurb (which i reckon will be what we'll sell for too, possibly a fraction more - although prices are falling - 500k if sold now). refurb is 45-50k though as a lot is needed.

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    regards Andrew Peers - property investor / sourcer - 07912674181

    andrewpeers@hotmail.co.uk


    Hi Chung

    Money is more likely to be made on buying not selling a property. The main beneficiary of a refurb is often HMRC in a combination of sdlt, vat, and income taxes.

    That added to finance and transaction costs whilst your money is out the door have to be factored in for an absolute minimum of 9 months.

    That said, do the maths as suggested above and rely on those whilst taking into account that houses and flats are "lumpy" things to sell.

    Where possible, work out who your buyer is before you buy......What happens if You have to hang on?

    Hope that helps

    Dave

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