tax on equity

[onebenito]

Hi, this is my first post so bear with me.
I am a small property developer and self employed.I am currently building some small properties with a value of £100k which i normally sell.As everyone knows the market is not good and i am thinking of the rental market.It has crossed my mind to get buy-to-let mortgages at 60% LTV on the properties releasing £60k on each property.My accountant says i will be taxed on any profits of the full £100k although i will not have received it.£40k will still be left in the equity in the property.This does not seem right. Can anyone give me advice on this.

 

[MyAccountantOnline]

Hi, this is my first post so bear with me.
I am a small property developer and self employed.I am currently building some small properties with a value of £100k which i normally sell.As everyone knows the market is not good and i am thinking of the rental market.It has crossed my mind to get buy-to-let mortgages at 60% LTV on the properties releasing £60k on each property.My accountant says i will be taxed on any profits of the full £100k although i will not have received it.£40k will still be left in the equity in the property.This does not seem right. Can anyone give me advice on this.

It is much better to get advice from your own accountant as he/she will have full details of your circumstances etc. I'd go back to them on anything you are unclear on and get them to explain it fully - it's what you pay for.

 

[BobBuilder]

Hi, this is my first post so bear with me.
I am a small property developer and self employed.I am currently building some small properties with a value of £100k which i normally sell.As everyone knows the market is not good and i am thinking of the rental market.It has crossed my mind to get buy-to-let mortgages at 60% LTV on the properties releasing £60k on each property.My accountant says i will be taxed on any profits of the full £100k although i will not have received it.£40k will still be left in the equity in the property.This does not seem right. Can anyone give me advice on this.

I don't see why you would be taxed on the "profit" left in the property that you are then renting - unless you transfer it to another individual or company.

You may however have a VAT issue as it's only houses for sale that are zero rated not houses for rent. The rules are quite complicated on this so you'll need advice.

 

[honada]

There are different options to morgages for buy to let, maybe it would be an idea to visit an Independant Financial Advisor, they could give you options based on your circumstances.

 

[David Griffiths]

I don't see why you would be taxed on the "profit" left in the property that you are then renting - unless you transfer it to another individual or company..

The charge will arise because an item has been transferred from trading stock to either a personal asset or to a fixed asset investment. There are long established rules, first based on case law and more recently on statute which says that this transfer must be reflected in the accounts at open market value.

The OP's accountant has all of the facts and there is no reason to suspect that the opinion is incorrect.