Hello Folks, I deposited on an unregistered land in Apr-2020 and exchanged contracts. It was a mortgagee sale. In early 2021, the vendor asked us to signed a new contract because the council wanted the vendor to lodge registration request under a company name which wasn't bankrupt/mortgagee. We signed a new contract in May-2021 and the old contract was scrapped. The stamp duty we paid earlier was refunded and then we repaid again in Aug-2021. We have been told the land is going to register in Nov-2021. If I sell the land in Oct-2021, do we get a CGT discount of 50% based on the old contract or the discount doesn't apply because we signed a new one? Thank you very much in advance. Cheers.
thats an interesting one. I think it would be based on the initial contract, the new one might be a new contract but the parties are still the same and no disposal would have occurred. This is assuming it is on capital account.
On a technical note, can you please clarify what “exchanging contracts” means? Is this just a NSW thing for a private treaty sale, where contracts are signed in counterpart?
In NSW parties sign separate contracts which they swap or exchange with each other. A contract is only enforceable at this point. thats when they are locked in.
The parties don’t seem to be the same, otherwise why was a new contract needed. The initial contract apparently was rescinded and the stamp duty refunded.
Ah yes, i missed that bit. It could be an assignment of the original contract or 2 separate contracts each with different CGT outcomes.
The initial CGT event was a "right" to settle on the land. If it was cancelled a new contract issued etc then a new contract is made and with different parties. Two CGT events Party A - $0 CGT as the deposit was refunded and there was no gain, no loss. Disregard. Party B has a costbase The 50% CGT discount may not apply to a resale of the land. That needs tax advice I suspect. Was it profit making or a mere realisation ? Also s118.130(2) ITAA97 may not start the CGT clock when you think ..... Many people lurch to the conclusion that the contract date is relevant for CGT. That is often the relevant date for a sale..... You may need to wait 12months or 3months...Or if its not a CGT asset or sale it may not even be relevant.
