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Property flipping, refurbishment & trading investors

Buy. Renovate. Sell. Repeat.

Flipping houses, or ‘fix to flip’, is an exciting prospect for many investors because of the quick turnaround and greater profits that can be made.

When it comes to tax, it can be complex. You'll need to consider Stamp Duty, as well as tax on the value you add to the property. You'll no doubt want to keep your options open should you want to rent out your property, too.

You have a choice to manage your tax exposure. You can do it in your personal name if you’re planning a low number of flips per year. Or you can use the flexibility of a limited company to have complete reassurance and make the business more tax-efficient.

Tax considerations when flipping property

Property flipping is a well-established investment strategy which involves purchasing a property and selling it for a profit. It’s also known as property trading, fix and flip, or buy to sell.

The majority of flipping involves some refurbishment, but this isn’t always the case; value can also be created by buying at a below-market price (perhaps at auction) or by resolving ongoing legal issues.

Property flipping is predominantly considered to be a trading activity, rather than an investment activity. This means that profits that you realise through flipping will be subject to either income tax or, more commonly, corporation tax for properties bought and sold via a limited company. The mindset and operating model of a property flipper is closer to that of a ‘conventional’ business, than that of a landlord.

Property flippers generally retain a portion of their sale profits to fund the purchase of their next property. Using a limited company for this has advantages, including flexibility and access to the business tax regime. In addition, depending on your long-term strategy, it may be beneficial to retain profits inside a limited company and claim tax relief on the retained profit when closing the company down.

Tax advice

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Property flipping frequently asked questions

Do I need a separate company for flipping if I already have a BTL one?: Yes, you do, as residential property lets are classified as investments, whereas property flips are considered trading. It's important to keep them separate for tax, accounting, and mortgage purposes to ensure clear and efficient financial management.
Why do investors use limited companies?: If you're a higher rate tax payer, or plan to have multiple buy-to-let or HMOs then using a limited company helps manage your tax more efficiently, and offers more flexibility. If you don't use a limited company you will need to do a self-assessment tax return for the rental income, and pay income tax on your profits. Our free Pro Masterclass explains more about this aspect of investing.
How long does it take to get the company set up?: Setting up a company typically takes around 3 working days, depending on Companies House processing times. More complex company setups may take longer.
Can I make changes to my company once it’s set up?: You can, but it might not be tax efficient and it could be costly in legal fees. It's best to set up your company correctly from the start. Our expert property tax advisors can guide you through this as part of our Advisory packages or in a one-off tax consultation.
I’m about to secure my mortgage. Does it matter if I’ve not set my company up yet?: Most lenders will require you to make an offer in your company name, so it's important to set your company up first to avoid delays.
Do you offer a one-off company set up?: No. All of our clients go on to appoint us as their accountant so we bundle the price of the set up with our plans. It includes our award winning tax software to help you stay compliant and manage your business income and expenses, and file your accounts at the end of the year.
Can you be my registered office?: Yes, you can keep your home address private by using our registered office address service. This service is included in our Advisory packages and can be added to our Ordinary or Optimised packages for just £5/month.
Do I need a business bank account?: Yes, limited companies must have a business bank account. This is because your company is a separate legal entity, and it’s a legal requirement to keep your personal and business finances separate.
If I become a director or shareholder of a limited company, would I lose my personal first time buyer perks?: No, as the company is a separate legal entity. As long as the property you are buying in your own name is your first, the first time buyer allowances should still apply.

Helpful resources for property investors

Unlock expert property tax knowledge with our free, in-depth Pro Guides, created by Provestor's specialist property tax accountants.

Pro Masterclass

Limited Company Pro Masterclass

Master property investing with limited companies in our industry-leading Pro Masterclass. Learn the ins and outs of set-up, benefits, and whether it's right for you.

Pro Guide

An Introduction to Property Tax

Discover the essentials of property tax for new investors - from buying to letting, and how to navigate personal vs. limited company ownership.

Property Tax Show

Avoid These 3 Limited Company Mistakes

Are you buying your next buy-to-let property in a limited company? If so, don’t complete until you’ve watched this episode of The Property Tax Show and read our free tax-saving guide.

Explore our full collection of Pro Guides

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