Can You Avoid Capital Gains Tax By Flipping Houses?

 

houses in London
white-and-black-house-photo

If you'd like to know more about house flipping in the UK  and if it helps avoid Capital Gains Tax, this is the guide for you. House flipping has been on the rise lately but if you want to avoid making any mistakes with potential tax implications, consult a capital gain tax advisor at IBISS & CO.

Flipping houses can have certain limitations, which can cause result in taxes decreasing your profits. Whether you want to flip houses to make extra cash or as a source of income, we'll discuss everything you need to know.

How Does House Flipping Work?

House flipping  is a real estate strategy where someone buys a property, keeps it for a short while, and sells it at a profit. Flipping houses means buying a home not for residence but as a real estate investment. It involves speculation about real estate market prices, similar to stock market prices.

Sometimes flippers renovate the property to sell it for a higher price. Other times, they keep the property for a year and wait for the market prices to rise so they can sell it for a high price. This way, they profit within a year or even a few months.

Property flipping took off when the COVID-19 pandemic started. Most property flippers were renovating houses and showcasing everything on TikTok while offering advice. However, is this strategy worth it?

Renovated house in Walsall
photo-of-an-empty-room

Does Flipping Houses Help Avoid CGT?

Whether house flipping is worth it or not depends on its tax implications. You would have to pay the Capital Gains Tax (CGT) for any asset you sell and earn a profit. This includes property, shares, and even cryptocurrency.

According to HMRC, house flipping isn't considered an investment. Hence, you won't have to pay the Capital Gains Tax if you start flipping houses and selling one for a profit. But, you would have to consider some other taxes.

In between the process of flipping, if you rent out the property, it could be subjected to CGT. So, you also need to consider that if you flip houses for a living, you would have to pay the income tax instead of CGT.

Your income tax will be paid after the self-assessment. If you own a limited company and buy a property through it, you would have to pay the Corporation Tax when you sell the property. Depending on the profits you earn, your tax liability will be determined.

If you plan on flipping houses, it's important to get it right. For simple business and tax advice  in London and Walsall , visit IBISS & CO . They have a team of chartered tax accountants and capital gain tax advisors  who can help you with the HMRC corporation tax account .

Contact them  today for more details.

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