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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Client has bought and sold 9 properties inside 6 years. would

Customer Question

Client has bought and sold 9 properties inside 6 years. would he be better declaring it as CGT or under income tax, to minimize his tax liability.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Can you tell me what your client did with the properties and how long he owned each one for please.
Customer: replied 1 year ago.

he renovated and sold. never rented.all inside the 6 years.

i see it as income tax related.

but HMRC want him to give CGT computation.

p.s he has over 80K of interest and interest redemption fees

Expert:  TonyTax replied 1 year ago.

Thanks.

 

If your client's intention was to buy property, renovate it and sell it a profit in as short a spece of time as possible, then he has been trading as a property developer. He should get a deduction for his interest charges which would not be the case if the profits were subject to Capital Gains Tax. Maybe that's why HMRC are seeking to tax the profits as gains. It's usually the other way around. You should ask on what basis they feel that CGT and not Income Tax is applicable in this case and appeal against their decision.

 

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

Expert:  TonyTax replied 1 year ago.
Hi again.

It's been a few days since I answered your question. Is there anything you need further clarification on?

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