CGT - When no intention to generate income

Hello everyone,

I am living in my current home for more than 5 Years. The property is an old property. With family growing we wanted to get a bigger and newer house. Around 3 years back I bought an off the plan land, last year the land got settled and I am getting built a new house there. The house will be completed in 2-3 months.

We have a kid now and after doing research it turns out the school in the new house zone is not good compare to my main residence. For kid education now I would prefer staying in my existing home or buy a better house in existing school zone and not move to new house.

If I stay in my main residence and decide to sell new constructed house.

Would I be liable for CGT, if my intention was not to generate income from it.

If Yes, how long would I have to live in the new house to avoid CGT.

Would new house be considered principal residence as well.

#The home loan for land and construction is an owner occupied and principal interest.

Thanks in advance.

 

Not an accountant and not giving advice, however you might want to read up on GST.

Residential premises

 

You would need to move into the new property in order it to be your main residence and you could elect for the 4 year construction to apply to the new property.

If you do so your current property will be subject to cgt

If you dont do so the property on which you are constructing a property will be subject to cgt

Either way one of the properties will be subject to cgt.

You will need to do the sums to work out which one is best.

 

Thanks @Mike A , My main residence has more capital growth than the new one.
Intentionally still I don't intent to make any profit from new built as long as after I sell it, I don't end up being under.
I would have converted the new house to an investment property, however the house is not an investment category house.
Many thanks for your reply.

 

Why do you think your intentions are relevant here?

 

there is no possibility of an exemption unless that new house became your main residence. You would need to live there for at least 3 months too.
But this would make the existing house subject to CGT.

 

Intention was never there to make money, not sure how do one justify it.
The house package I chose is highly upgraded one, the size of the house 30 sqm, the size of the land 555 sqm, Its a nice house with all upgrades.
The loan is OO, PI. I would probably check if I could convert this into an investment and interest only. Not sure if I would be able to claim it back.
The school ranking of the new house is much lower than the main residence school.

 

Thanks @Terry_w, existing main residence had more capital growth than the new.
In fact since I have upgraded the house, I have blown the cost, had I would have known the school ranking I would have build a much smaller house and without any upgrades.
Extras what I have paid I may not be able to recover, comparisons are of lower cost in the area.

 

So no GST? Interesting, I thought it would be a new residential premises.

 

Mike hasn't mentioned anything about GST. When it is purchased from the developer the purchase price will include GST.

 

Gotcha, I forgot about the developer.

 

if you sell will you actually make a gain? If not cgt is a moot point.