What is property flipping?
Property flipping is a well-established investment strategy, and 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 tax considerations
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 entrepreneurs' relief on the retained profit when closing the company down.
Our accountancy service
How we help property flippers / traders
Our experienced property accountants can help you to understand the best structure for your property flipping business - be it personally purchased properties or setting up a property investment company. We can also help you understand the potential advantages of shared ownership with spouses, and deeds of trust.
Our award-winning accounting app eases the burden of day to day administration, helps you keep track of your outgoings and ensures you’re operating tax efficiently. Our team of accountants are here to prepare and submit all of your tax returns, ensuring that you remain compliant with your tax and legal obligations.
In addition, we’re here to support you whenever you need us. Be it discussing the tax implications of your next project, returning profits from your investment company or anything else along the way.
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