A few simple CGT questions.

[s1oww]

I have a few simple CGT questions.

I'm just about to buy a property with my friend. After a long fight with the council i have got planning on it to turn it into 2 flats, that we may sell on in 6 months.

My question is if the mortgage is in just one of our names then would he have to pay cgt on the sale on one of the flats, but not the other as it will be his only and main residence. He could gift the other one to me making it my only residence and then when i sell it i wouldn't have to pay cgt on it, therefore avoiding cgt totally. Hope this makes sense .

If the mortgage went in joint names then would we still have to pay cgt on the sale of the second flat?

Would it be better if we registered ourselves as a ltd company and pay a different tax?

My main concern at the moment is do we have a joint mortgage or not, if we have to pay cgt what ever then it will be a joint mortgage as it will save us some solicitors fees.

Thanks

[Eric Mc]

Simple questions.

Complicated answers

[smirnoff]

Who is on the mortgage doesnt really matter because you can draw up a trust deed saying who actually owns it.

For a one off project it wouldnt be worth setting up a limited company (waits for Eric Mc to confirm)

Just be careful because lenders dont like properties being split, and you will have to pay off the charge before selling either property, or do both at exactly the same time.

Adrian

[johnfm]

As Eric may tell you, if you buy it with the express intention of doing it up & selling it, it will not be liable for CGT. You & your business partner will be 'trading' as developers. You will be liable for income tax (or corporation tax if through a ltd co) on the trading profits of the project.

That is my understanding

[Eric Mc]

Strictly speaking, that is correct.