Property Gains - sole trader or limited company

Property Gains - sole trader or limited company

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A client is intending to start buying small terraced houses, refurbishing and selling them for profit.

My immediate thought was that it would be better to buy the properties in joint names with his wife, so as to take advantage of 2 x inidvidual annual exemptions for CGT purposes.

However this means that insurance and mortgage interest are not allowable expenditure for CHT purposes, although I think they would be allowable against rents if he first rented the properties before selling them.

Anyone any thoughts on this?

Grace Gariff

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By AnonymousUser
09th Apr 2007 14:34

Property Gains
You state in your first line that your clients' intention is to buy terraced houses with the sole intention of a quick refurb and to sell on at a profit. This being the intention then IMO your clients' are property developers and thus profits made will be subject to income tax, corporation tax and possibly National Insurance depending on the business structure.

CGT annual exemptions will be irrelevant as your clients' are not looking to hold these properties as investments.

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By nick farrow
13th Apr 2007 16:34

don't forget CIS
and as developer don't forget to set up CIS

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By CrowtherP
13th Apr 2007 14:47

I agree with Jason
Of course for the medium to long-term hold, the Taper CGT relief rate is attractive, as compared to the new corporate rate of 22% for small gains. This is especially so if a non-earning spouse is involved.

The Revenue Authorities will want Income tax / Corporation tax from the sale transaction, if the objective is to trade in the buy / sale of houses, rather than holding them as medium or long-term investments.

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