Selling my house, renting a property to release funds

[S97jvince]

Hi and thanks in advance for any help anyone can give me.

I have a few questions if that's ok?

I am currently selling our family home, once sold we will move into rented accommodation so I can free up the capital we had in our home to buy several properties to rent out also may buy one to do up and resell.

1. Can I offset the rent we will be paying for renting against any profits made? I realise under normal circumstances that I cannot but wondered that as I am now having to pay rent whereas if capital was not being used for buying buy to let, I would use that money for buying a house thereby not having living costs. Sorry this is a bit convoluted but hope it makes sense.

2. I intend to buy 4/5 houses this year at approx 120k per house. Is there any way of calculating whether it is best to run this as a sole trader or as a ltd co.?

3. I know I can't claim for any labour I do on a property myself but if I have a separate ltd company for renovating properties and charge myself for any works carried out is this acceptable.?

4. Final question:) I believe I can claim fuel etc for viewing properties/ visiting agents etc but just want to confirm.

Thanks again

Jasin

[pawncob]

1. No.
2. You need to do profit accurate forecasts before you can decide whether LTD is better. It probably isn't, depending on your CGT position.
3. Not much benefit here. Companies pay tax as well.
4. Yes, on a mileage basis.

[section 44]

may buy one to do up and resell.

This would be subject to tax on income rather than tax on capital gains regime. If you did this via a company then it is possible that you could be subject to income tax even if you disposed of the property indirectly by selling the shares in the company.

[S97jvince]

Thanks very much for everyone's advice.

Another question if that's ok.?

So on a simplistic level can I run through a theoretical example to confirm my understanding

House purchase £100,000
Mortgage fees ie broker, upfront cost for mortgage, solicitors fees £5000
Pay company to renovate £5000
Materials ( what is covered under this ie can I fit new machine machine and claim or just fixtures) £2000
Travel to and from property £250 @ 45p mile
My labour - not claimable
Selling costs £2000
Total cost =£ 114,250
selling price £129,250
Profit £15,000
Tax paid on profit at my rate of tax ( can this be split between my wife and I for tax allowances?)
Assuming 20% tax. =£3000 tax
Net profit = £12000

Could someone advisenif this looks correct or if I have missed something major somewhere?

Thanks very much

Jason

[pawncob]

You can split with wife (in any ratio) if she's a partner. Remember partners have joint and several liability in respect of debts. Houses don't always make a profit.
Otherwise, your figures are correct.

[S97jvince]

Great thx alot