foss
Apprentice
Joined: 20 Mar 2006
Posts: 6
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 Posted: 01/03/08 - 10:19 Post subject: |
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| Hi there! Couple of months ago I bought an old house downtown. I decided that it would be best to invest some more money in it, do some repairs, redecorate it and then sell it at a higher price. Since HMRS will consider that as a profit, they will probably charge me some taxes, right? Since I’m not very familiar with the issue, I wondered if someone here could give me some info about Tax on development property. Thank you. |
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lauritz
Apprentice
Joined: 13 Dec 2005
Posts: 10
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| Posted: 02/02/08 - 00:48 Post subject: |
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| Hello. Your case, in which you are buying a house, invest in it and then sell it for a higher price is a classic case of property development. In our country, property development is eligible for CGT. Now, what is CGT? It’s a Capital Gains Tax. In your case, you will have a significant profit, or “gain”. That gain will be subject of taxation. In the end of tax year, profit you will get from this transaction will be taken into account. Rate of CGT depends on the amount of gain, plus the amount of your income. If both of them together are below starting rate for income tax, CGT rate will be 10%. If they are between starting and basic rate, CGT rate will be 20%. In cases where income and gain are above the basic rate limit for income tax, your CGT rate will be even 40%. If you make some losses on your assets, then you can receive some deductions. Well, that would be it. I hope you will do well selling that house. Take care! |
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