6 Month Holding of land - Settlement July 1st 2017

Hi Squad,

I have a situation where i have purchased a block of land, placed a DA on title and have now have completed numbers (again and again) and believe its better to sell the land now than complete the build (i havent started as yet). Reason being is my return on investment is much higher now than on completion.

I have a offer to sell the land (which i have in my name, not a company) which after all costs will have provide a capital gain and be taxable

Question: If i sell the land in April and Settlement is July 1st (purchasers choice, and their request) do i account for the money on my tax return this year.

Question 2: as there is a capital gain i wish to put money in supper, and pay down some other debt etc prior to EOFY. With settlement (next year effectively, i wont be able to do this)

any help would be awesome

thanks

 

1. This
2. you can't spend the money till you get it!

 

Thanks, greatly appreciated.

 

If you're looking to put money into your super, I'd suggest that you seek to get the purchaser to agree to release the deposit (& be paid directly into your super as an undeducted contribution - so 15% tax only paid within the fund). Have a chat to your accountant/super fund advisor & solicitor as to your options to pay into your super (this may exceed your cap for the year but you may be able to bring forward some contributions too).

 

I think you have might have made an income gain and not a capital gain. The income might be taxed as ordinary business income.

GST might apply to this as well.

There might be opportunity, as a developer, to tax it on settlement. This needs further consideration.

I think the ordinary super rules will apply so nothing fancy other than the bring forward rule pre 1 July if you are under 65. As the property is likely to be taxed on income account you will probably not have an opportunity to contribute using the small business cgt concessions.

Again, a lot more work is needed to clarify that area as well.

This is all very prelim. A lot more work is needed to understand the facts.

 

Thanks Scott, sending an email to the accountant now. I have a signed contract form the purchaser, i haven't signed mine as yet

 

Thanks Ross, I am under 30, however, am i still able to do as you've said as i Purchased in my name? (i'm assuming yes), however, seems a bit too good to be true.

 

1. Is this a single one off sale or have you done this before ?
2. Was your intention to buy land, develop and eventual resell. Then its subject to GS. You may reduce it IF you can use the margin scheme. BUT you must correctly structure the sales contract and correctly register for GST. Otherwise you may remain liable to GST of 9.09% of the sale price. If you use the margin scheme you may even get a refund of GST after some costs!!
3. Sale within 12mths OR with a profit making intent is not a CGT event but a profit subject to full tax.
4. Normally a tax event based on settlement only occurs with business income NOT where a isolated profit making intent occurs

 

Hi generic name.

Most of my content was actually a bit on the down side for you so it was not really that good. Even for the super I indicated that you probably did not have access to the cool small business concessions.

If you are in touch with a good accountant who clearly understand the facts you should be fine. If he is not making sense then reach out to the PC community for clarification.

 

Qualified to provide financial advice ?? Only licensed advisers can "suggest" or give advice. Its like giving medical advice. You arent qualified. Accountants often arent qualified either

General info : This year up to 30 June a contribution may not be deductible toall taxpayers. In any case caps apply and excessive super will impose extra tax. Consider preservation for 30+ years and other issues too. Bring fwd contributions dont affect tax.

 

Hence the statement "Have a chat to your accountant/super fund advisor & solicitor as to your options to pay into your super" in response to the OP's lead Q2

 

You cant say I suggest and then say I didnt give advice. Better to say I have no idea but if you really want to make a mistake I think you should....