Property Development

Otter · Postby **Otter** » Thu Mar 01, 2007 2:36 am

I was made redundant about 6 months ago and have decided to buy a property to develop and then hopefully sell on at a profit. The purchase is going through and I expect it to be completed in the next 4 weeks. I don't know whether I should operate as a sole trader or form a limited company (through an accountant). I want to minimise my CG or CT tax. If I go down the company route, should the company buy it initially or can this be transacted after the event. Finally this is all new to me, I have no contacts/friends who use accountants so I am concerned that I chose someone who is able to give me good advise. I live in Coventry. It may have an impact but my wife is a higher band tax payer.

adi36 · Postby **adi36** » Thu Mar 01, 2007 2:43 am

what are the figures involved? i dont see the pint of a limited company if its a one off transaction at this stage though.

Otter · Postby **Otter** » Thu Mar 01, 2007 2:48 am

Purchase price of property Â£124,995 with an expected resale of approx Â£150,000. Conversion costs of up to Â£13,500. If it goes OK then I will continue with other purchases

Peter D · Postby **Peter D** » Thu Mar 01, 2007 2:48 am

Hi Otter, This is clearly an 'adventure in trade' and as such HMRC will consider this as Income Tax and NI contibutions and you will have to register as self employed. If you intended to and did rent the property out then if you sold it then CGT and the CG allowance would apply. A Limited Company may be the way to go if you envisgage continuing in this trade and stepping up a gear and perhaps having more than one property on the go at a time and even employing one or two guys. You will need to consider this carefully and take some local professional advice. Use the 'Find a Professional' In the Help box on the right of this page.

Cynic · Postby **Cynic** » Thu Mar 01, 2007 2:53 am

Have you much experience of property development?

Otter · Postby **Otter** » Thu Mar 01, 2007 2:56 am

Hi Cynic, yes on the 5 properties I have owned as well as 2 for my kids

adi36 · Postby **adi36** » Thu Mar 01, 2007 3:14 am

Peter_D is correct if you intend to undertake property investment on a long term basis. You need to take pro advice as to whether a company route is the way to go.

King_Maker · Postby **King_Maker** » Thu Mar 01, 2007 5:13 am

A company may be the best option with that sort of profit - especially if you don't intend/need that amount to live on.

But seek professional advice directly related to YOUR exact circumstances.

Otter · Postby **Otter** » Tue Mar 06, 2007 3:19 am

Thanks for the replies, I have a couple of options, a referal through my solicitor and another from a local ad, a FCCA accountant who specialises in small business work.