minimising CGT on property sales
Discussion
Hello all
Building 3 little cottages. May result in circa £100k 'profit' on resale. Plot was bought in Nov 2004 in wife & my name.
Do not want to cough up 40% CGT.
Are there any clever, lawful methods of reducing the burden??
What about clever, not-quite-lawful ways???
Obviously, simplest way is not to sell them - merely let them out and refinance.
Building 3 little cottages. May result in circa £100k 'profit' on resale. Plot was bought in Nov 2004 in wife & my name.
Do not want to cough up 40% CGT.
Are there any clever, lawful methods of reducing the burden??
What about clever, not-quite-lawful ways???
Obviously, simplest way is not to sell them - merely let them out and refinance.
Do you intend to buy and sell any more properties after this venture is completed?
You have to be careful that you are not running a property development "business". If you are, trading tax rules apply rather than Capital Gains Tax rules (and you would straight away lose the (from 6 April 2007) £9,200 Capital Gains Tax personal Allowances available to you both.
You have to be careful that you are not running a property development "business". If you are, trading tax rules apply rather than Capital Gains Tax rules (and you would straight away lose the (from 6 April 2007) £9,200 Capital Gains Tax personal Allowances available to you both.
Eric Mc said:
Do you intend to buy and sell any more properties after this venture is completed?
You have to be careful that you are not running a property development "business". If you are, trading tax rules apply rather than Capital Gains Tax rules (and you would straight away lose the (from 6 April 2007) £9,200 Capital Gains Tax personal Allowances available to you both.
You have to be careful that you are not running a property development "business". If you are, trading tax rules apply rather than Capital Gains Tax rules (and you would straight away lose the (from 6 April 2007) £9,200 Capital Gains Tax personal Allowances available to you both.
Arent shareholders and/or Directors of such a business allowed to withdraw profits at only 10% tax? Not my direct area I have to admit.
No.
First of all, if the business was purely a sole-tradership or partnership, the taxes are worked out on the profits generated by the business - irrespective of what the owner(s) of the business darws out for himself/themselves.
If the business is a limited company, the company pays Corporation tax on its trading profits, AFTER deducting salaries (including directors' salaries) but BEFORE payment of dividends.
Of course, the directors' salaries would be subject to normal PAYE and NIC charges.
First of all, if the business was purely a sole-tradership or partnership, the taxes are worked out on the profits generated by the business - irrespective of what the owner(s) of the business darws out for himself/themselves.
If the business is a limited company, the company pays Corporation tax on its trading profits, AFTER deducting salaries (including directors' salaries) but BEFORE payment of dividends.
Of course, the directors' salaries would be subject to normal PAYE and NIC charges.
If you sell shares in a "trading" company, the disposal is deemed to the disposal of a business asset and consequently will benefit from higher rates of Taper Relief for Capital Gains Tax purposes.
However, there are tons of privisos and pitfalls to watch out for as the Revenue can challenge whether the sale of company shares is actually a sale of a business asset.
However, there are tons of privisos and pitfalls to watch out for as the Revenue can challenge whether the sale of company shares is actually a sale of a business asset.
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