On 13/11/2012 07:15, Stephen wrote:

I was interested in buying a house, renovating it, and then selling
it, hopefully for a profit. I haven't done this before. I saw an
accountant who said that if I did this, the sale will be considered
income and I will have to pay income tax on the profits. The
accountant advised buying the house and then letting it. He said that
this way, when the house is sold, I would have to pay capital gains
tax rather than income tax and this is more tax "efficient" (i.e. less
to pay).

BTDTGTTS

Had the same advice myself. What I think the above boils down to is
whether your new 'business' is primarily one of 'property development'
or 'letting'. We sold our property after 3 years, paying CGT, and it
didn't catch any attention from HMRC. I suppose you just need to do
the sums (paying income tax versus paying CGT and renting) and work out
for yourself which will be best for you.

He also said that it would be best to get my other half involved
because any profits would then be offset against two personal tax
allowances, rather than one. We are not married (I think that makes a
difference tax-wise). Is there a uk.tax group where I should be
posting this?

That's got to be right, whether you're married or not - that's assuming
you have a stable relationship of course, especially if you're the one
putting up the cash.

The only thing holding me back from purchasing a suitable house is not
knowing whether to put both names on the mortgage or whether just to
buy and borrow in my name. The last time I spoke to the accountant, he
said that legal ownership was largely irrelevant and that "beneficial
ownership" was what counts.

SWMBO and I have rental property in joint names - mortgages, land
registry records, tenancy agreements, the lot; and split the rental
income. If you own the property as 'tenants in common' rather than
'joint tenants'(ggogle what the difference is) you can vary the
proportions of ownership at will, which is reflected in the distribution
of rental income between you. So if one of you is pays top rate of tax
and the other pays basic rate, you can set the ownerships as say 1%:99%.

I have emailed some more questions to him but thought I would ask
here, whilst I await his reply. Is this right? Can I put the house and
mortgage solely in my name but then split the rental income with my
other half? What is "beneficial ownership"? I am surprised that the
name on the house and mortgage is not relevant.

Not sure about beneficial ownership; however if you don't own the
property jointly when you come to sell it, then you can't take advantage
of your partner's CGT allowance, which is a no-brainer. You can
transfer assets around immediately before the sale, but it may attract
HMRC attention as not being 'real' and just being a tax dodge, and
dissallowed.

www.taxationweb.co.uk is a pretty good forum

David