Taxman set to get hot on property
Amateur property developers could be next in line to fill the taxman's coffers, accountants have warned.
Link: Tax Q&A: Buying property to let
Soaring house prices and low interest rates, coupled with the popularity of TV property shows, have fuelled a boom in refurbishing run-down houses over the past few years, meaning many individuals have ploughed their money into more than one property.
But those who have turned their hobby into what could be defined as a trade should tread carefully as they might be faced with a huge tax bill.
‘If the taxman decides the primary purpose of the acquisition or expenditure is to sell the property at an early date for a profit then those carrying out the project will be liable to tax, even if the family live in the property,’ said Susie Swift, partner at Saffrey Champness.
John Whiting, tax partner at PricewaterhouseCoopers, said: ‘There’s always been some exposure in this area. There’s been some serious amounts of money being made. It’s come up on (the Revenue’s) radar screen and it’s not surprising.’
But Whiting said that he hoped the tax authorities wouldn’t become too ‘obsessed’ with the issue.