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Where Taxpayers and Advisers Meet

Residential Property Development For Personal and Business Use

speekies
Posts: 1
Joined: Mon Nov 26, 2018 10:40 pm

Residential Property Development For Personal and Business Use

Postby speekies » Mon Nov 26, 2018 10:51 pm

My wife and I are wanting to acquire some land to develop on close to our home. The land is big enough to fit our desired house, a detached house, as well as 2 or 4 semi-detached houses, depending on architect and land findings. We plan to develop all of the houses, sell the smaller homes and live in the larger one. I am wondering whether it is more tax efficient to do this through a limited company or personally, plus any other advice would be helpful. I have read about some grants, funding etc. that may may benefit us too, we live in the East Midlands

I have outlined some other key facts that may affect the outcome.

The development of the land will cost around £600,000 and the sale of the houses (based on 2 semi detached on top of ours) will be 2 x £250,000 and 1 x £400,000 - £900,000 total. We plan to keep the £400,000 ourself/ buy it from our Ltd company.
If we did this via a company we would look to reinvest any profits made in further properties to avoid corporation tax before year end.
We currently own two homes (with mortgages). A buy to let and our the house we live in.
The funding will come from family/ friends plus a loan.
I am currently earning the maximum amount through dividends from a family company and basic pay up to the 50% tax band.
My wife earns around £33,000 from her job.

AdamS93
Posts: 220
Joined: Tue Sep 26, 2017 6:28 pm

Re: Residential Property Development For Personal and Business Use

Postby AdamS93 » Mon Nov 26, 2018 11:56 pm


If we did this via a company we would look to reinvest any profits made in further properties to avoid corporation tax before year end.
This statement is worrying. Reinvesting proceeds from sale will not reduce your corporation tax. You need an accountant to guide you through this.

There are all sorts of tax to consider - VAT, SDLT, Corporation tax and income tax. The transactions in land rules will probably mean you’ll pay income tax rather than CGT on disposal of the properties if you hold them in your own name.

The best advice one can give here is to see a local professional.


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