Property investment

feartheclaw

Hi all, hope I'm in the right forum here

I am considering investing in a property with 2 or 3 other people which we are going to renovate and sell. Any advice on how best to structure the venture? E.g. Should we set up a company or partnership? Any other insights would be great

Thanks
ftc

sohappy

feartheclaw wrote: »

Hi all, hope I'm in the right forum here

I am considering investing in a property with 2 or 3 other people which we are going to renovate and sell. Any advice on how best to structure the venture? E.g. Should we set up a company or partnership? Any other insights would be great

Thanks
ftc

Would that property be liable to capital gains tax when you sell?

feartheclaw

This is one of the issues I want to find out about. In normal circumstances (if I was buying it myself) CGT would be payable at 33%. But if we set up a company or partnership do we take the profit as "salary" and end up paying nearly 50% tax. I know its a question for an accountant but just putting out a few feelers here. Thanks

Peterdalkey

if you don't even know the basics, just don't do it!

Setup a limited company 33.3% for each just simply to avoid the inevitable partnership fallout with something like that. If theres that kind of money involved you really don't want to be in a partnership type situation, because people start out with the best intentions and things/circumstances might change.

Then you need a contract between all three parties in the company setting out the companies plan, structure, timelines for projects.

Pay Corporation tax on your profit, and I guess CGT on your personal profits once taken out. Maybe theres some exemptions around if you check it out.

Larry Wildman

There's a 7 year holiday from CGT which applies if you buy a property before 31 December 2014.

If you buy it using a corporate, the corporate will benefit from the holiday, but you guys will have tax on the way out of the corporate.

Get professional advice would be my advice.

sohappy

Larry Wildman wrote: »

There's a 7 year holiday from CGT which applies if you buy a property before 31 December 2014.

If you buy it using a corporate, the corporate will benefit from the holiday, but you guys will have tax on the way out of the corporate.

Get professional advice would be my advice.

my understanding was that you have to keep the property for 7 years for it to be exempt of CGT ?

shoutman

sohappy wrote: »

my understanding was that you have to keep the property for 7 years for it to be exempt of CGT ?

Believe this is correct.

dbran

Seek proper professional advise on this as there could be a significant amount of money at stake here.