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CGT query

Discussion in 'Accounting & Tax' started by Martinez22, 2nd Aug, 2016.

  1. Martinez22

    Martinez22 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    181
    Location:
    Perth
    We would like to do a build and retain (currently living in front house) then move into back unit once complete and turn front house into investment and hold both for 12 months. If we were to then sell both, do we pay CGT on the old house or new house?
     
  2. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    Location:
    Southern Highlands NSW
    Yes you will pay CGT - GST too maybe
     
  3. Martinez22

    Martinez22 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    181
    Location:
    Perth
    Yes but on which property??
     
  4. Only new property is subject to GST.

    The issue of CGT needs to be explored as there is a main residence catch if you build and the 12 month CGT discount isnt always a given. Especially if you complete the new build them move to the other property.

    Read TD 92/135....Ignore the example of the "builder" as its a red herring. The concept of building a property for the purpose of producing a profit is the key element. If you do that CGT may not even apply and all the profit may be taxed and there is no main residence exemption.
     
  5. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

    Joined:
    18th Jun, 2015
    Posts:
    11,770
    Location:
    Southern Highlands NSW
    You could possibly choose.