Capital gain Tax on a build & flip
Jan 16th 2017, 5:28 pm
#16
Dichotomus tinker
Thread Starter
Joined: Aug 2013
Location: Ontario, Canada
Posts: 6,678
Re: Capital gain Tax on a build & flip
@ post 14, thanks for that
I suppose 'at our age' for the many reasons that you mentioned that we should not be interested in or to have any anxiety, stress or undue pressure getting into property developement, whether its build to sell, fix & flip, or even consider buy to let.
Although we are both healthy, it comes down to the reality 'hey we are getting on in years', even though we may not feel the age we are, we are old compared to many we know that have pop their clogs at a yonger age than we are now, or those our age with health issues, some in care or in retirement homes.
So, its back to the drawing board of 'what if anything should we invest our money in' - maybe just be conventional to stick it in a 'current account' & not worry about inflation or Brexit.
Add to that, the time is here to consider the 'equity release/reverse mortgage' even though at the present time we do not need the extra cash for the lifestyle that we have.
I would rather give any of the capital that we have to our children rather than leaving it till the 'end of our days'. My wife is not so sure about that
I suppose 'at our age' for the many reasons that you mentioned that we should not be interested in or to have any anxiety, stress or undue pressure getting into property developement, whether its build to sell, fix & flip, or even consider buy to let.
Although we are both healthy, it comes down to the reality 'hey we are getting on in years', even though we may not feel the age we are, we are old compared to many we know that have pop their clogs at a yonger age than we are now, or those our age with health issues, some in care or in retirement homes.
So, its back to the drawing board of 'what if anything should we invest our money in' - maybe just be conventional to stick it in a 'current account' & not worry about inflation or Brexit.
Add to that, the time is here to consider the 'equity release/reverse mortgage' even though at the present time we do not need the extra cash for the lifestyle that we have.
I would rather give any of the capital that we have to our children rather than leaving it till the 'end of our days'. My wife is not so sure about that
Jan 16th 2017, 5:35 pm
#17
Dichotomus tinker
Thread Starter
Joined: Aug 2013
Location: Ontario, Canada
Posts: 6,678
Re: Capital gain Tax on a build & flip
I agree with everything except the bolded bit. Not that I've done exhaustive research, but anecdotally, I sold my house near Toronto in 2015 for 4x what I paid for it in 1993, sold it to people who demolished it. They just wanted the land.
PS: the house had been extensively renovated and was in pristine condition. I was very pissed off with the buyer, who lied about his intentions.
PS: the house had been extensively renovated and was in pristine condition. I was very pissed off with the buyer, who lied about his intentions.
Her response was 'why the hassle & cost', after all what difference will the selling price be if you don't do the renovations, even down to a re-paint - for the reason the purchaser (just like you did when you bought) will go about doing it up for their purpose?
Same with my FIL property, just list it the way it is & sell it at market, after all it is still 'sellers market'.
Or on that point, as in Novo's case the buyer 'demolished it'
Jan 16th 2017, 5:45 pm
#18
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: Capital gain Tax on a build & flip
We are getting close to putting ours up for sale. A discussion with our daughter was 'we'll do this that & the other' before selling it.
Her response was 'why the hassle & cost', after all what difference will the selling price be if you don't do the renovations, even down to a re-paint - for the reason the purchaser (just like you did when you bought) will go about doing it up for their purpose?
Same with my FIL property, just list it the way it is & sell it at market, after all it is still 'sellers market'.
Or on that point, as in Novo's case the buyer 'demolished it'
Her response was 'why the hassle & cost', after all what difference will the selling price be if you don't do the renovations, even down to a re-paint - for the reason the purchaser (just like you did when you bought) will go about doing it up for their purpose?
Same with my FIL property, just list it the way it is & sell it at market, after all it is still 'sellers market'.
Or on that point, as in Novo's case the buyer 'demolished it'
Jan 16th 2017, 5:53 pm
#19
Was in Canada, now home.
Joined: Aug 2011
Location: Devon
Posts: 3,388
Re: Capital gain Tax on a build & flip
Yes, we had a similar experience. Our purchaser did not completely demolish, but they only kept the shell of the old house.
But we were in central Edmo and already knew that most of the value of our house was in the land.
Most new building in Canada goes on on city margins where land is much cheaper, so I make an assumption that the average development land value is lower than in the UK.
But we were in central Edmo and already knew that most of the value of our house was in the land.
Most new building in Canada goes on on city margins where land is much cheaper, so I make an assumption that the average development land value is lower than in the UK.
Jan 16th 2017, 6:17 pm
#20
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: Capital gain Tax on a build & flip
Yes, we had a similar experience. Our purchaser did not completely demolish, but they only kept the shell of the old house.
But we were in central Edmo and already knew that most of the value of our house was in the land.
Most new building in Canada goes on on city margins where land is much cheaper, so I make an assumption that the average development land value is lower than in the UK.
But we were in central Edmo and already knew that most of the value of our house was in the land.
Most new building in Canada goes on on city margins where land is much cheaper, so I make an assumption that the average development land value is lower than in the UK.
Jan 17th 2017, 3:17 pm
#21
Dichotomus tinker
Thread Starter
Joined: Aug 2013
Location: Ontario, Canada
Posts: 6,678
Re: Capital gain Tax on a build & flip
as a sort of twist to this thread & just looking at the 'have you been to Bognor Regis'
http://britishexpats.com/forum/maple.../#post12154053
Mention of places such as Blackpool, Morecambe, Southport being seaside towns, investment properties look doable as would other areas in the UK.
Reason I say this is on the flight over to the UK in November I was speaking with a 40 something fella that has lived in Canada 20+ years who together with his brother who lives in Blackpool have several rental properties in there. Two that are B&B, the rest buy-to-let. He also has income properties in Canada.
So maybe a joint venture with a relative in the UK with me being the VC, could be another option?
Novo, take a look at this 12 bedroom semi in Bridlington in the East Riding for sale at £179,950
12 bed semi-detached house for sale in Wellington Road, Bridlington, East Riding Yorkshire YO15 - 17600107 - Zoopla
Possibilities are endless & never too old to invest in something
On the Bridlington property, yes we would live in something such as that or similar, living on the ground floor & rent out the rest.
Why not
.
.
http://britishexpats.com/forum/maple.../#post12154053
Mention of places such as Blackpool, Morecambe, Southport being seaside towns, investment properties look doable as would other areas in the UK.
Reason I say this is on the flight over to the UK in November I was speaking with a 40 something fella that has lived in Canada 20+ years who together with his brother who lives in Blackpool have several rental properties in there. Two that are B&B, the rest buy-to-let. He also has income properties in Canada.
So maybe a joint venture with a relative in the UK with me being the VC, could be another option?
Novo, take a look at this 12 bedroom semi in Bridlington in the East Riding for sale at £179,950
12 bed semi-detached house for sale in Wellington Road, Bridlington, East Riding Yorkshire YO15 - 17600107 - Zoopla
Possibilities are endless & never too old to invest in something
On the Bridlington property, yes we would live in something such as that or similar, living on the ground floor & rent out the rest.
Why not
.
.
Last edited by not2old; Jan 17th 2017 at 3:35 pm.
Jan 17th 2017, 4:00 pm
#22
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: Capital gain Tax on a build & flip
So maybe a joint venture with a relative in the UK with me being the VC, could be another option?
Novo, take a look at this 12 bedroom semi in Bridlington in the East Riding for sale at £179,950
12 bed semi-detached house for sale in Wellington Road, Bridlington, East Riding Yorkshire YO15 - 17600107 - Zoopla
Possibilities are endless & never too old to invest in something
On the Bridlington property, yes we would live in something such as that or similar, living on the ground floor & rent out the rest.
Why not
The listing shows "running costs"at £645 pm (without definition of what those costs are, probably just utilities). That's nearly £8K a year. It also says it has been a "family home" (****ing big family!) so who knows what it would cost to convert it into a legal rooming house, for which I doubt there's much demand in Bridlington anyway.
My FIL, although having been born in Hastings, was brought up in Bridlington by his grandparents after his father left his gin-soaked mother. The grandparents were solid middle class merchant people (owned several draperies in the area). They lived in a huge house which was much later converted into a hotel.
It went out of business in the 1970s.
Caveat emptor.
Mind, I see your cunning plan to live on the ground floor. That's where the bar area is.
Last edited by Novocastrian; Jan 17th 2017 at 4:03 pm.
Jan 17th 2017, 4:17 pm
#23
Dichotomus tinker
Thread Starter
Joined: Aug 2013
Location: Ontario, Canada
Posts: 6,678
Re: Capital gain Tax on a build & flip
VC = Venture capital from me, with my nephew the 'builder' as the do whatever.
On the 'Bridlington' property running cost as stated at the bottom of the listing, is a single family home is with 10% down & 'mortgage of £574/mth + £53 water.
Looks like from the listing pictures that it was or is (signs on the ouside) a B&B/hotel?
The council tax rate I would guess is band C, so that'd be ~£1200/yr (£100/mth).
So, cash purchase, utilities of say £100/mth + £100/mth council tax, insurance £20- £30/mth that has to be low cost accommodation. Provision for maintenence & repairs another £50/mth.
Even renting just one or two rooms for £350/mth, all the expenses would be paid.
Another option is rent the rest out as 'office' to a small business, maybe someone such as an accountant or someone that wouldn't use up much in the way of 'utilities or wear & tear'
On the 'Bridlington' property running cost as stated at the bottom of the listing, is a single family home is with 10% down & 'mortgage of £574/mth + £53 water.
Looks like from the listing pictures that it was or is (signs on the ouside) a B&B/hotel?
The council tax rate I would guess is band C, so that'd be ~£1200/yr (£100/mth).
So, cash purchase, utilities of say £100/mth + £100/mth council tax, insurance £20- £30/mth that has to be low cost accommodation. Provision for maintenence & repairs another £50/mth.
Even renting just one or two rooms for £350/mth, all the expenses would be paid.
Another option is rent the rest out as 'office' to a small business, maybe someone such as an accountant or someone that wouldn't use up much in the way of 'utilities or wear & tear'
Jan 17th 2017, 4:28 pm
#24
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: Capital gain Tax on a build & flip
VC = Venture capital from me, with my nephew the 'builder' as the do whatever.
On the 'Bridlington' property running cost as stated at the bottom of the listing, is a single family home is with 10% down & 'mortgage of £574/mth + £53 water.
Looks like from the listing pictures that it was or is (signs on the ouside) a B&B/hotel?
The council tax rate I would guess is band C, so that'd be ~£1200/yr (£100/mth).
So, cash purchase, utilities of say £100/mth + £100/mth council tax, insurance £20- £30/mth that has to be low cost accommodation. Provision for maintenence & repairs another £50/mth.
Even renting just one or two rooms for £350/mth, all the expenses would be paid.
Another option is rent the rest out as 'office' to a small business, maybe someone such as an accountant or someone that wouldn't use up much in the way of 'utilities or wear & tear'
On the 'Bridlington' property running cost as stated at the bottom of the listing, is a single family home is with 10% down & 'mortgage of £574/mth + £53 water.
Looks like from the listing pictures that it was or is (signs on the ouside) a B&B/hotel?
The council tax rate I would guess is band C, so that'd be ~£1200/yr (£100/mth).
So, cash purchase, utilities of say £100/mth + £100/mth council tax, insurance £20- £30/mth that has to be low cost accommodation. Provision for maintenence & repairs another £50/mth.
Even renting just one or two rooms for £350/mth, all the expenses would be paid.
Another option is rent the rest out as 'office' to a small business, maybe someone such as an accountant or someone that wouldn't use up much in the way of 'utilities or wear & tear'
If after due diligence it is rentable and if (as I suspect you are) you are cash purchasers then I could see it working out. Bridlington, despite being in an economic crisis, is actually a lovely, if fading, place.
Good hunting!
Jan 17th 2017, 5:51 pm
#25
Was in Canada, now home.
Joined: Aug 2011
Location: Devon
Posts: 3,388
Re: Capital gain Tax on a build & flip
A B&B?
You'd have to start by doing a considerable amount of adaptation to put in ensuite bathrooms to the bedrooms.
Then you are going to have to be prepared, in your seventies to cook around 24 breakfasts every day, and clean all the bedrooms and communal areas.
You have vastly underestimated the utility bills and the insurance costs. A B&B in Bridlington is about £35 a night. You'd struggle to make a profit.
You'd have to start by doing a considerable amount of adaptation to put in ensuite bathrooms to the bedrooms.
Then you are going to have to be prepared, in your seventies to cook around 24 breakfasts every day, and clean all the bedrooms and communal areas.
You have vastly underestimated the utility bills and the insurance costs. A B&B in Bridlington is about £35 a night. You'd struggle to make a profit.
Jan 17th 2017, 6:48 pm
#26
Dichotomus tinker
Thread Starter
Joined: Aug 2013
Location: Ontario, Canada
Posts: 6,678
Re: Capital gain Tax on a build & flip
A B&B?
You'd have to start by doing a considerable amount of adaptation to put in ensuite bathrooms to the bedrooms.
Then you are going to have to be prepared, in your seventies to cook around 24 breakfasts every day, and clean all the bedrooms and communal areas.
You have vastly underestimated the utility bills and the insurance costs. A B&B in Bridlington is about £35 a night. You'd struggle to make a profit.
You'd have to start by doing a considerable amount of adaptation to put in ensuite bathrooms to the bedrooms.
Then you are going to have to be prepared, in your seventies to cook around 24 breakfasts every day, and clean all the bedrooms and communal areas.
You have vastly underestimated the utility bills and the insurance costs. A B&B in Bridlington is about £35 a night. You'd struggle to make a profit.
The essence of my previous post with that link to the 12 bedroom property in Bridlington is that it is or already has been a guest house. see the pictures & info in that link
In the broader picture (looking at all options with minimum work or cost), I was 'just saying' the 'what if' moving into the 12 bedroom Bridlington property, living on the main floor (self contained) to then rent out even just one room or one floor as an office to cover our own expenses.
Sure the Bridlington property as a 'family home' just for the two of us is big by UK standards, yet also reasonable in price, a place for family or our own Canadian children to come visit & any small income that we could get from it to pay all the running cost would be bonus
Jan 17th 2017, 7:13 pm
#27
Concierge
Joined: Jan 2013
Location: Western Australia
Posts: 21,139
Re: Capital gain Tax on a build & flip
For anything related to being a private landlord in the UK, including acquisition, tax, regulations, universal credit, tenancy and management, I recommend this forum The #1 Property Forum for Private Landlords | Property Tribes
Jan 17th 2017, 9:43 pm
#28
Dichotomus tinker
Thread Starter
Joined: Aug 2013
Location: Ontario, Canada
Posts: 6,678
Re: Capital gain Tax on a build & flip
@ post 27, thanks for that
Going back to the Bridlington property, from the floor plan, another option is...
12 bed semi-detached house for sale in Wellington Road, Bridlington, East Riding Yorkshire YO15 - 17600107 - Zoopla
Rent out the ground floor to a senior couple. The rent would include utilities, with no need to do any utility conversions for Gas, electric & water - just have one metered supply.
We as the owners would occupy the remaining upper floors.
The construction would be two doors, a small wall + converting one of the bedrooms to a kitchen (from a back to back existing bedroom) <£5000 if we do the work ourselves, with help from my nephew. I'm good with electrical & plumbing, just need a gas fitter to put in agas feed & an electrician to sign off on the electrical work + kitchen fittings
The rent would likely be be double (at market price of course) whatever the running cost of the property would be. Running costs being, all utilities + council tax
The income minus the cost portion of the rented section becomes income
Basically net income before tax of approx £3000/yr & we'd live free with chump change for internet, phone etc.
There are similar properties to the above around the area as well as other places in the UK that could easily be bought for 'income purposes' all while the owner lives on site
SOS, I found on Zoopla today a vacant building lot in Merseyside on a street of established houses. The property is a serviced lot that looks as though what was on it was demolished that sits between two other houses. The listed price is £10,000. The big but is, can something be put on the lot that can sell for a profit in the local market?
.
Going back to the Bridlington property, from the floor plan, another option is...
12 bed semi-detached house for sale in Wellington Road, Bridlington, East Riding Yorkshire YO15 - 17600107 - Zoopla
Rent out the ground floor to a senior couple. The rent would include utilities, with no need to do any utility conversions for Gas, electric & water - just have one metered supply.
We as the owners would occupy the remaining upper floors.
The construction would be two doors, a small wall + converting one of the bedrooms to a kitchen (from a back to back existing bedroom) <£5000 if we do the work ourselves, with help from my nephew. I'm good with electrical & plumbing, just need a gas fitter to put in agas feed & an electrician to sign off on the electrical work + kitchen fittings
The rent would likely be be double (at market price of course) whatever the running cost of the property would be. Running costs being, all utilities + council tax
The income minus the cost portion of the rented section becomes income
Basically net income before tax of approx £3000/yr & we'd live free with chump change for internet, phone etc.
There are similar properties to the above around the area as well as other places in the UK that could easily be bought for 'income purposes' all while the owner lives on site
SOS, I found on Zoopla today a vacant building lot in Merseyside on a street of established houses. The property is a serviced lot that looks as though what was on it was demolished that sits between two other houses. The listed price is £10,000. The big but is, can something be put on the lot that can sell for a profit in the local market?
.
Last edited by not2old; Jan 17th 2017 at 9:58 pm.
Jan 17th 2017, 10:11 pm
#29
Concierge
Joined: Jan 2013
Location: Western Australia
Posts: 21,139
Re: Capital gain Tax on a build & flip
@ post 27, thanks for that
Going back to the Bridlington property, from the floor plan, another option is...
12 bed semi-detached house for sale in Wellington Road, Bridlington, East Riding Yorkshire YO15 - 17600107 - Zoopla
Rent out the ground floor to a senior couple. The rent would include utilities, with no need to do any utility conversions for Gas, electric & water - just have one metered supply.
We as the owners would occupy the remaining upper floors.
The construction would be two doors, a small wall + converting one of the bedrooms to a kitchen (from a back to back existing bedroom) <£5000 if we do the work ourselves, with help from my nephew. I'm good with electrical & plumbing, just need a gas fitter to put in agas feed & an electrician to sign off on the electrical work + kitchen fittings
The rent would likely be be double (at market price of course) whatever the running cost of the property would be. Running costs being, all utilities + council tax
The income minus the cost portion of the rented section becomes income
Basically net income before tax of approx £3000/yr & we'd live free with chump change for internet, phone etc.
There are similar properties to the above around the area as well as other places in the UK that could easily be bought for 'income purposes' all while the owner lives on site
SOS, I found on Zoopla today a vacant building lot in Merseyside on a street of established houses. The property is a serviced lot that looks as though what was on it was demolished that sits between two other houses. The listed price is £10,000. The big but is, can something be put on the lot that can sell for a profit in the local market?
.
Going back to the Bridlington property, from the floor plan, another option is...
12 bed semi-detached house for sale in Wellington Road, Bridlington, East Riding Yorkshire YO15 - 17600107 - Zoopla
Rent out the ground floor to a senior couple. The rent would include utilities, with no need to do any utility conversions for Gas, electric & water - just have one metered supply.
We as the owners would occupy the remaining upper floors.
The construction would be two doors, a small wall + converting one of the bedrooms to a kitchen (from a back to back existing bedroom) <£5000 if we do the work ourselves, with help from my nephew. I'm good with electrical & plumbing, just need a gas fitter to put in agas feed & an electrician to sign off on the electrical work + kitchen fittings
The rent would likely be be double (at market price of course) whatever the running cost of the property would be. Running costs being, all utilities + council tax
The income minus the cost portion of the rented section becomes income
Basically net income before tax of approx £3000/yr & we'd live free with chump change for internet, phone etc.
There are similar properties to the above around the area as well as other places in the UK that could easily be bought for 'income purposes' all while the owner lives on site
SOS, I found on Zoopla today a vacant building lot in Merseyside on a street of established houses. The property is a serviced lot that looks as though what was on it was demolished that sits between two other houses. The listed price is £10,000. The big but is, can something be put on the lot that can sell for a profit in the local market?
.
Not meaning to put you off, but it's not as easy as picking a piece of land, building something on it and then selling it for a profit (but I'm sure you already knew that!) One of the more comprehensive purchasing checklists I've seen:
LAND BUYING CHECKLIST
LEGAL CONCERNS
◾Is the lot buildable?
◾Has the site passed a perc test that is still valid (some expire in 2-3 years)? Is it suitable for a conventional septic system, or for an expensive alternative system?
◾Are the boundaries clearly and accurately marked?
◾Can the seller provide clear title for the property?
◾Is it zoned for the type and size of house you are planning?
◾Where can you build on the site? Does the proposed house plan violate any rules: setbacks or other zoning restrictions, septic rules, rights-of-way, covenants, wetlands, or other regulations?
◾Is there legal access by road or right-of-way? Who maintains the road?
◾Is there adequate road frontage to build?
◾Are there any liens, rights-of-way, easements, covenants, or other deed restrictions or encroachments on the property?
◾Are there building restrictions due to wetlands, water frontage, steep slopes, historical or cultural sites, or other local, state, or federal regulations?
◾Was the land formerly used to store old vehicles, farm chemical, industrial chemicals, or other toxins that you will need to clean up?
◾Does all or part of the lot lie in a floodplain?
◾Is there sufficient potable water?
◾Will you own the water and mineral rights?
◾Are there any endangered or protected species on the property?
CONSTRUCTION ISSUES
◾Is there adequate access for construction equipment?
◾Are there problem soils, including expansive clay, un-compacted fill, or ledge that may require blasting.
◾Is the area prone to high radon readings?
◾Is there a high seasonal water table, seasonal streams, or low-lying areas subject to flooding?
◾Are there steep slopes or unstable land that requires special engineered foundations.
◾Will large areas of cut and fill be required to level the land?
◾Are there areas subject to erosion that will need stabilization?
DESIGN ISSUES
◾Is the land flat or sloping
◾Wooded or open
◾Shaded or sunny
◾Solar exposure
◾Wind exposure/buffering
MAIN COST FACTORS
◾Cost of land acquisition
◾Legal fees: title search, title insurance, and other closing costs. Also may include variance applications, challenges from abutters, right of way issues, etc
◾Survey
◾Water and sewer connection fees (for municipal systems) – may cost hundreds to several thousand dollars
◾Connection fees for other utilities: phone, electric, cable, gas,
◾Septic system (for rural sites): perc testing, system design, and installation
◾Well installation: including drilling, pump, plumbing to house, pressure tank, and water treatment, if needed
◾Land clearing
◾Excavation, cut and fill, and final grading
◾Landscaping
◾Road/driveway construction
◾Permits and fees: well, septic, building, driveway, variances, other
◾Impact fees: often cost thousands of dollars. varies by state and municipality. Also called development fees, mitigation fees, service availability charges, facility fees, and other creative names.
Jan 17th 2017, 11:15 pm
#30
Dichotomus tinker
Thread Starter
Joined: Aug 2013
Location: Ontario, Canada
Posts: 6,678