Hi All,

I'm thinking of flipping a unit in Future City 2b if possible, through Visium.

Can anyone advise if:

1. The developer has allowed this in their case?

2. Capital Gains are taxed as personal income if a property is sold before actually owned?

Many thanks for all replies...

N

I investigated the practicality of flipping a couple of units a about a year ago. Unless you really need to sell prior to completion the combination of large fees requested from the developer and the tax position makes flipping a pretty unatractive option

Developer Fees - Even if your contract allows flipping most make this subject to agreement from the developer. This agreement usually comes at a cost, I was quoted 10% of the total unit price.

Income Tax - If you sell on before completion, the whole amount of any payment you receive will be taxed as income with no allowance for either your purchase or sale costs.


Regards

Alan

Hi Alan,

Thanks, yes presumed it would be expensive.
When you mention the 10% developers' fee, do you refer to 10% of the initial buying price or the increased price at sale?

Thanks, N

I was quoted 10% of the total sale price, however I understand that this varies from developer to developer.

Another point to consider is there are you likelly to actcually get a sale, when I investigated selling units in 2 PS developments i found that there was little or no likelihood of selling at anything like the valuation figures being quoted by PS.

Regards

Alan

Hi Alan,

Understand - I've been working on the basis of around 9000-9500 PLN/sqm for Future City 2b but of course I need to check everything out first, developer terms, market, pricing...bit of a minefield...

Thanks for your input...

Hi

The 10% fee is sometimes mentioned in the contracts, and in others flipping is not even noted. In this case you may still be asked to pay this 10% fee.

As for tax, if you are flipping this is usually subject to personal income tax which is very high.

Kindest regards
Debbie

Hi Debbie,

Thanks for the reply - I get the feeling the tax situation is as you say - I think Stanislaw elaborated on this at length before also, not ideal as you say.

I'm now checking with TGC to see what the particular situation is for Future City 2b.

Thanks, N

FYI...from the strategy report:

Clients can sell prior to the signing of the Final Purchase Contract (FPC) by obtaining consent from the developer. The issue with this strategy is that the tax applicable to the profit is classed as personal income tax and escalates up a scale to the 40% level.

Following the 2009 tax changes this would reduce to the 32% rating. Selling after completion attracts the flat 19% capital gains tax but has complexities relating to the acquiring of your land ownership documents from the land registry.