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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have bought a property to renovate and sell. happy

Resolved Question:

Hi,
i have bought a property to renovate and sell. happy to pay the CGT.
can i claim the interests and redemption interest as part of my costs.
thanks
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

If you have bought the property with a view to a renovation and sale, HMRC will assert that you have traded as a property developer and will charge any profit you make to income tax and self-employed insurance contributions, not capital gains tax.

All the interest would be deductible in calculating your profit if you are taxed on it as a property developer but not if you disclose it as a capital gain. Most people who hold on to a property for any length of time tend to let them out and then they can claim interest charges against the rental income. If you let the completed property for a year or so, you would probably be safe to disclose any profit on its disposal as a capital gain as you would be considered by HMRC to be a property developer, though it is possible to be a property developer and a property investor at the same time.

I hope this helps but let me know if you have any further questions.
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