Buying off plan and "flipping"

CCOVICH said:
This is incorrect-you are liable for FTB/owner occupier stamp duty relief clawback if the property is rented out within 5 years other than under the rent a room scheme.
Click to expand...

I stand corrected and of course you're right CCOVICH. Told you I wasn't a morning person!
 
Bit confused.

Do i incur any clawback if i buy the place, do not rent it out, and sell in 2/3 months ? (as a FTB)
 
phoenix_n said:
Bit confused.

Do i incur any clawback if i buy the place, do not rent it out, and sell in 2/3 months ? (as a FTB)
Click to expand...

No, but you will lose your FTB status AFAIK.
 
CCOVICH said:
No, but you will lose your FTB status AFAIK.
Click to expand...

Yes. But as a owner-occupier of a new build you do not pay stamp duty so if you continue to buy and sell new builds, aren't you always avoiding stamp duty ?
 
phoenix_n said:
Yes. But as a owner-occupier of a new build you do not pay stamp duty so if you continue to buy and sell new builds, aren't you always avoiding stamp duty ?
Click to expand...

Yes, as long as the floor area is under 125 square metres. There is still a tax advantage (reduced stamp duty) to being a FTB if buying a property that does not fit this criterion.

Bare in mind that if you make a business out of flipping, the Revenue will consider it as such, and a different set of tax implications will arise.
 

For a second i thought i would have to pay stamp duty on my intended purchase. (even though i knew i didnt)

I dont see the tax man getting involved. You dont gain anything over someone who waited a year before selling but you are just minimising your risk.

Seriously though it sounds kinda ideal to have your money always in the bank (getting better rates as time moves along) and little exposure to property market except your deposit and the initial selling period. The only downside is having to rent but it easily enough to find cheap rent if you look hard enough. Offer 6 months rent in advance and you can get amazing deals out there.
 
I don't understand your last post at all.

What is it you intend doing, is it undertaking a once-off buy from plans and then sell before completion, or a series of such transactions?

If it is a once off, then the 'only' downside is the loss of FTB status. But as was said earlier in this thread, you need the developer and solicitors etc. onside for this to work. There should be no stamp duty implications, but you may be liable to CGT on any gain (less allowable costs).

When I talk about the Revenue taking an interest, I am referring to a scenario when this would be happening on a regular basis, and would be deemed a 'trade' and hence attract income tax on the profit generated.
 

Thanks with sticking with me. Lets say i go thru to completion. I get my apartment and because new build no stamp duty as owner occupier.

I then sell in 2 months and (say) make profit of 50,000 euros.

I put another deposit on another plans . Owner occupier again so no stamp duty.
I go to completion. 2 months later i sell. (say) 50,000 profit.

Isnt that 100,000 (less transaction cost, 4 months mortgage payments and rent paid by myself) profit that is not taxable.

(not sure if i am explaining it correctly)
 
phoenix_n said:
Thanks with sticking with me. Lets say i go thru to completion. I get my apartment and because new build no stamp duty as owner occupier.
Click to expand...

Correct.

I then sell in 2 months and (say) make profit of 50,000 euros.[/QUOTE]

There may be a CGT liability. Talk to your solicitor.

phoenix_n said:
I put another deposit on another plans . Owner occupier again so no stamp duty.
Click to expand...

Correct, as long as the floor area is under 125 sq. metres.

phoenix_n said:
I go to completion. 2 months later i sell. (say) 50,000 profit.

Isnt that 100,000 (less transaction cost, 4 months mortgage payments and rent paid by myself) profit that is not taxable.
Click to expand...

Again, there may be a CGT implication.

AND, since you appear to be making a habit of this (buying and selling) the Revenue could deem that you are in the business of buying and selling houses, and tax you as such (i.e. income tax on the gains, as opposed to (possible) CGT).
 
Thanks CC.

But doesnt that 125sq metres a bit outdated when you take into account the price penthouses get these days.....
Was it devised to stop the practice on buying and selling (moving up the market) but does not take into account high priced penthouses.
 
phoenix_n said:
But doesnt that 125sq metres a bit outdated when you take into account the price penthouses get these days.....
Was it devised to stop the practice on buying and selling (moving up the market) but does not take into account high priced penthouses.
Click to expand...

I have no idea-this is more of a debate as opposed to question of fact.
 
phoenix_n said:
Seriously though it sounds kinda ideal to have your money always in the bank (getting better rates as time moves along) and little exposure to property market except your deposit and the initial selling period.
Click to expand...

I'm not sure your only exposure is the deposit. In the present market of constantly rising prices builders are only too happy to let you out of the contract (either keeping your deposit or refunding it at their discretion) as they can usually sell on at the same or a higher price but if the market were to turn the other way I think they would be within their rights to force you to close the sale. If you were unable to close and they suffered financial loss as a result they may be able to sue you for damages.
 
That's what our solicitor advised us way back when we put down our deposit.
 
While I understand that the sub-seller would have to pay no stamp duty and only would have to pay whatever CGT is due, I also believed that the purchaser of the subsale would also not have to pay stamp duty assuming that he is an owner occupier and that the property is less than 125sq metres.

Is my understanding here correct??
 
You must log in or register to reply here.
Menu
Log in
Register