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Capital Gains Tax when Flipping


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Hi there,


I wonder if anyone had an opinion on using ones CGT allowance when flipping a property. My accountant has said I should avoid using this allowance when buying a property with the intention to sell it (flip it) once refurbished as the profit made from the sale are income and not a Captial Gain.


Does anyone have any experience with this? 


If treated as income tax, I am going to move the property into a Ltd Company (it is mortgage free) and take the Corp Tax hit. That way building up some history in the Ltd Co which commercial lenders like to see.


Apologies if this topic is covered elsewhere. if it is please point me in the right direction.


Thank you


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  • 2 weeks later...

This is my lst post - I see no-one has yet answered your query Alistair, i too am in this situation.  I have had properties ive let out for years and want to sell one to use the equity for property flipping, but ive been told by my accountant i will have to pay so much CGT.  Ive had my property since l993 and it will mean losing an awful lot of money.  Im not sure but if you are married and buy a property in your wifes name, or put half of it in her name, you would save that way.................but as i said, im looking for advice and think it might be prudent to go to a good financial advisor. 

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I'm by no means fluent in the area of tax, but as nobody else has replied, I thought I'd give it a go.


The way I understand it is that you are either classed as a property trader or and investor (or both)


Traders typically flip (say 6 months after buying) and Investors hold on to the property in the long term.

Traders' sales are treated as income and taxed as income tax, whereas Investors are given the CGT allowance.

So if you are flipping multiple houses per year, HMRC will treat you as a Trader and you will have to pay income tax. I have heard that if you flip just one or two houses you may get the CGT allowance. I also understand that if you rent out the property for a short while before selling, it's easier to convince HMRC that you are an Investor, and you then get the CGT allowance when you sell. So you could rent it out for ~6 months and get the allowance.


Also worth noting is that if the property is jointly owned, you get 2 x CGT allowance.


As I said, I don't know all that much about it and haven't done it in practice, but have read a fair bit on the topic recently. Check out Iain Wallis' books, they're really helpful.

Hopefully somebody else can elaborate on what I've said here.

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If you buy a property with the intention to flip it, HMRC will view the gain as trading income, not capital. You will not be able to use your CGT allowance to offset any profit made. 


Sheryldene Dunne
Accountant & Client Manager







We can only give general information on a public forum, and nothing in this post should be interpreted as advice. To speak to us about becoming a client and receiving bespoke advice, call us on 020 3936 2170 or email tax@propertyhub.net

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  • 1 month later...
On 8/23/2018 at 6:01 PM, Sheryldene said:

If you buy a property with the intention to flip it, HMRC will view the gain as trading income, not capital. You will not be able to use your CGT allowance to offset any profit made. 





How do HMRC determine the “intention” to flip? If a property is bought, refurbed, let for 6 months and then sold for example would that be deemed trading or investment?  


In a similar position to others on this thread except there are four of us and a mixture of higher and lower rate tax payers so it’s even more complicated. Wondering whether incorporating might the way to go?


Any advice appreciated...




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Hi Nick,


If your to do what you propose once or maybe twice over a few years then HMRC might find it difficult to prove that your intention was to trade and the profits could be subject to CGT. If however you are buying and selling 1 or 2 properties per year and always trying to make use of the personal allowance HMRC would quite easily be able to establish a pattern that amounts to trading and not investing.


Using a limited company can be beneficial but there is no 'one size fits all' answer. Each persons circumstances and future plans will influence what is 'best'. More detailed tax advice is usually needed that looks at the bigger picture.





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