IS HOUSE FLIPPING STILL A THING?

Sep 27, 2021
house flipping still a thing

What’s happened to mom and pop property flippers? Is house flipping still “a thing”? Well, first of all:

WHAT IS HOUSE FLIPPING?

Basically, it means to buy, renovate and sell a house, usually fairly quickly. Then rinse and repeat, hence the term to “flip” the house. It can still be done, and there is money to be made, but…

LAW CHANGES HIT AMATEUR FLIPPERS

Residential property trading has long been labelled a contributor to the housing crisis, but new data suggests “flipping” is now a minority practice.

Why? The reason amateur flippers – not professionals – have been hit is law changes, and specifically: The Brightline Test. This Test catches all sales within 10 years of purchase, unless they are new builds. However, this doesn’t really affect traders. Traders are already paying income tax on their capital gains anyway, says Garreth Collard, property accountant at EpsomTax.com. “Traders have always been liable to pay tax on their gains because the activity is entered into with the view of making a profit.”

Technically, people who renovated their own homes with the intention of flicking on at a profit should also have paid income tax on their gains, but most flew under the radar, says Collard.

Read more about Garreth’s insights in this OneRoof article by Diana Clement.

OTHER ROAD BLOCKS FOR PROPERTY TRADERS

In the last 18 months, factors that have conspired to make it harder for your average Joe to make a profit from a flip include:

  • Delays in the chain of building supplies
  • Sky-rocketing costs of building materials
  • Not enough tradespeople
  • COVID -19 lockdowns

So, is there still money to be made in property flipping? Yes… but tread with caution.

FURTHER READING

Should you buy an existing house, or a new one, or a #newbuild e.g. an “off the plans” rental? We weigh up the pros and cons here

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