Has anyone seen that programme on Channel 4 called 'Property Ladder' where they purchase & renovate a house with the intention of selling it at a profit?
At the end of the programme they usually say that any profit would be liable to tax. I was wondering what sort of tax would any profit made in this way be liable for?
Income tax or Capital Gains Tax?
If someone purchased a house with the intention of renovating & selling at a profit, would the person be required to become VAT registered?
Usually liable to income tax.
Unless they lived in it - in which case it might be CGT, or possibly exempt as a PPR.
If rented out, then CGT.
In article , Jack writes
If the intention at the time of purchase was to renovate and sell, it is classed as trading, or dealing, and therefore income tax.
If it was bought as an investment and, say, let out for a few years before sale, it is subject to CGT, and therefore the CGT allowance is available.
If you buy, renovate, and sell houses serially, without living in them properly for a few years, the revenue, (if they investigate you), may class it as trading, rather than your Principle Private Residence, and it is liable to income tax.
You dont need to be VAT registered.
I wonder why people doing this don't set up some kind of company which through which they buy and sell the properties, claim back VAT on tools used/purchased and give themselves a dividend?
John.
You can't claim any VAT back as it is an exempt supply.
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