The following Tax Q&A provides comprehensive and up to date legal information covering:
This Q&A refers to a UK resident and domiciled individual; a property that is not the individual’s principal private residence; and profits or gains that are generated by the disposal of the flats after construction.
The tax treatment of property development costs and returns depends heavily on whether the person is trading or investing in land.
This question is considered in detail in Practice Note: Dealing in property or property investment? Factors that need to be taken into account in determining whether a particular individual is trading or investing include:
whether there have been any previous transactions in land, their frequency and the intervals between them
whether there was intention at the time of the acquisition of the land:
to develop and sell it on
to keep it for own use, or
to keep it in order to generate income
and whether that intention has changed over time
whether the transaction is structured in a manner typical of a property dealer
Where there has been a change of intention, a property that was ac
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