Flip Sale

[CorkHombre]

I was told of someone who is buying a new property which will be built in July, apparently she is buying this from someone else who bought this property from the plans a year ago and is selling this on at a nice profit. Apparently this property is being purchased as a "new property" i.e. no stamp duty (owner occupier, <125 sq metres).
Can this be the case that someone can buy a property off the plans and sell it onto someone else as a "new property" surely it is a second hand home and would be liable for stamp duty ... can someone clarify this

 

[woods]

If the property is passed on before being registered then it is regarded as a new property. Many many people have made a lot of money speculating this way. Some people buy multiple properties in a new developement and sell them all on before closing. The developer knows that it is going on but he needs names for the bank so can't do anything about it.

 

[ClubMan]

Surely the buyer of the property which will then be sold on to an owner occuper faces certain tax liabilities such as investor stamp duty, CGT on any gain arising etc.? Isn't there a clause in most standard off the plans purchase contracts that precludes this sort of "flip selling"? Is it necessarily the case that the owner occupier purchaser of the property will be buying a new property? Isn't a certificate of non occupancy on the part of the seller required?

 

[woods]

CGT has to be paid. That is all.

 

[ClubMan]

By the flip seller. Surely the have to also pay either stamp duty or VAT? If they're deemed to be engaging in a trade then perhaps Revenue would apply some other form of tax treatment than might normally apply to an private sale?

 

[woods]

I agree that something should be done about this habit but it is very common and I know people who have used this as their main investment vehicle over the past few years.

 

[ClubMan]

I'm not saying that anything should necessarily be done about it. I'm just trying to tease out the tax and other implications. Does anybody have an authoritative view on this?