How do you avoid tax when you sell a property that you have bought to do up and sell on?

Arthur Says

The profit on selling a property that you have bought to do up and sell on is subject to income tax, not capital gains tax.

If you have bought it already, it is a bit late to ask the question.

If not, it may be worth your while purchasing it through a limited company. That way you can save yourself 3% tax, i.e. the difference between 22% basic rate income tax and 19% corporation tax, and also save yourself Class 2 and Class 4 National Insurance.

This assumes that you are a basic rate taxpayer.

If you are a higher rate taxpayer, it may be worth your while considering going into partnership and working together with someone you trust who is a basic rate taxpayer, either as a partnership, or splitting the ownership of shares in and working in the limited company together.

About Arthur Weller

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Arthur Weller is a Chartered Tax Advisor (CTA) and an integral part of the Property Tax Portal team. He offers a special rate tax advisory service on any aspect of UK taxation, including property taxation, for as little as £97 for a 30 minute telephone tax consultation.

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