Capital gains tax when subdividing 2 blocks and holding one

For the accountants or the tax gurus out there -

I have a block that I'm in the process of splitting into 2 side by sides. What are the CGT implementation on selling one block and holding the other? I understand I pay CGT on the profit turned minus expenses BUT if I were to sell one block and build on the other as a rental what would be the CGT (if any) on the back i sell?

Scenario is this:
Purchase price $300k
Stamp duty, demo costs, holding costs, subdivision costs approx $100k

Block price estimate per block approx $250k.

I sell one block @ $250k and build a rental on the other. Will I be exposed to CGT on the block sold? if so, how much?

TIA
Scott

 

First you need to determine if this is on capital account or revenue account. If revenue no CGT but just income tax.

You will need detailed tax advice and make sure you consider the GST too.

Don't forget the deductibility of interest issues.

 

Many of the key issues are explained in the Developer Toolkit attached. And dont ignore GST

 

Thanks for the response guys.

I spoke with my tax accountant who has said I can claim the full subdivision costs against the sale of one block. Then down the track if I sell the second block I will up for tax against it.

Works out well, Purchase price $300k x 2 blocks = $150k per block. $100k in demo and sub division costs means I can sell one block @ $250k and pay zero tax and essentially have a spare block to build on as a dual key rental that I will hold.

Scott

 

This in incorrect.

 

What?

 

Change tax adviser fast. WRONG. 100% wrong - In a professional capacity I would describe the advise as *****. A 100% numpty who will get you penalised.

The attached property developer toolkit explains some of the technical issues incl
- apportioning when land is subdivided (a valuation may be needed!!)
- Income tax v's CGT on profits arising from subdivs
- GST
- Using the margin scheme to reduce GST

 

Hmm Wow ok that you guys very much - this is not cool at all.

Im definitely going to agree with you. Thanks @Paul@PFI for the documents.

PC forum delivering yet again.

@Ross Forrester you are Perth based - I may give you a call to discus '

Cheers