Capital Gains Tax for Land property

Hello everyone,

I would like to ask for advice regarding capital gains tax. We bought an off the plan land in Wollert, Victoria for $230,000 in 2016. The value of our land now is $340,000 (based on the prices of recent lot release in the same estate).

We were originally planning to relocate and build a house there but due to unforeseen circumstances we decided to stay in Sydney and will sell the land come settlement. I've read in the ATO website that we need to pay the full amount of CGT if we sell it in less than a year. If we defer selling it after a year, then we would just have to pay 50% of CGT? Also in one of the property website I've read, it was mentioned that the relevant date for calculating capital gains is the contract date, not the settlement date. Is this truly the case?

Our plan is that, if we need to hold the property for a year to receive a discounted CGT then we would apply for a fixed 1 year loan. This is actually my first time to post in any forum about properties. Any advice from you guys will be greatly appreciated.

kmasc

 

It seems A year has passed already since entering contracts

 

On the assumption that the land is a CGT asset rather than land acquired to resell for a profit several issues arise:

1. You seem not to have an enterprise so dont need to register for GST etc
2. The land seems a CGT asset.
3. Provided the dates between contracts is a year + 1 day then the profit (after allowing for duty, legals, holding and ownership costs !!! and selling costs would be subject to the general 50% CGT discount. As Terry says it already occurred.

 

Yes Terry, but I was not quite sure that CGT is based on the contract date not the settlement date as I didn't find that information in the ATO website. Thank you for your reply.

 

Thank you for your reply. I gained heaps of info from it.