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Property strategy advice required...


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I'm thinking about a few different strategies at the moment, and wondered if anyone could see any pitfalls in this idea:

 

Purchase a property in need of some love, on a normal (no redemption fee) mortgage 10% deposit, and use my capital to do it up. 

 

After 6 months, remortgage it to a buy-to-let and release the equity gained from improving the house, let the house and use the new capital to buy another house on a normal mortgage and repeat. 

 

This way I'm assuming if I came to sell the properties at some stage I'd wouldn't be charged CGT as they were each my main residence through the renovation process. 

 

I'm an amateur so forgive any mistakes, and any advice greatly received. 

 

 

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HI Darren,

 

I am not an expert either, and your strategy sounds good to me, but I am sure I have read somewhere on here if you use a standard residential mortgage in that way you put yourself at risk of being black listed. I may have read it wrong, hopefully someone with a bit more knowledge and experience will answer this for you. Kevin Wright has posted some really good financial information on here on numerous posts. 

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Hi there yes I've heard from people who were blacklisted when this became a pattern - I'm guessing the first one would probably be ok but I'd try and leave it for longer than six months personally, it's a bit too obvious. On my main residence bought  many years ago I stayed with the same lender who did both residential and BTL (Birmingham Midshires) and just gotr permission to let it - I realeased capital through increased borrowing with them at a new rate.

 

A lot of the allowances and taper relief for CGT have dissapeared over the past few years - I've just had advice on  this and will indeed pay a high level of CGT if I now sell that property having not lived there for some years.  I sold a flat last year that I had lived in on a residential mortgage for three years and let for 7 and I do have a CGT liability.  That said the cost of the major works, purchase and  sale will be deducted so you may be fine, and it also depends on your salary if you are working and tax level. It pays to be strategic about  all that  and maybe get advice from an accountant  who specialises in property up front - you will get a lot of good advice on this forum.

 

Bridge funding or getting friends and relatives to lend may be other options..

 

Ps no one minds 'newbies' here we are all here to help and assist each other and weve been through most things!

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