Detached Dual Occupancy, CGT, GST etc....

Hi all,

Ok, my question may have been asked before, but I cant find an exact match of our circumstances.

Here are the main points:

- we own property with a dwelling that we're currently legitimising via DA (well we have a mortgage, the bank owns most of it!).
- we are going to build a new house on the land, and our block then becomes a detached dual occupancy (we can't sell one dwelling off, but can only long term rent it out)
- we move into the new house, and rent out the initial dwelling
- value of new house is 2 x the value of the initial one
- we intend claiming interest on the rented out house as expense, along side property maintenance etc (of course we declare the rental income also)
- initial loan converts to an investment loan and the new loan on the new house remains a home loan

Questions:
- What % if any becomes liable for CGT if we sell the entire property in N years time?
- if eligible, how should we make the best of the situation (from what I'm thinking we're kind of shooting ourselves in the foot a bit)
- is GST payable on this, or only if the income is added to my sole trader income that currently is eligible
- what other pitfalls or traps could we fall into here?

Sorry for the long winded explanation, but just need to make sure our situation is clear.


Many thanks for your time

S

 

Can anyone please advise us on this?

 

CGT will impact a future sale. Likely apportioned based on time and also area. Maybe just area ? Depends

1. You may need a reg valuer to provide a valuation to apportion the former lot into each portion so that the original costbase can be apportioned into each. Then the new build will have the cost of construction added to the new section.
2. GST ? You planning to sell ?
3. Sole Trader ? No. Its not business income. Its personal income of the owner/s and included in rental income. Not YOUR income but "we"
4. QS report for the former home ? Only Div 43 likely applies. Maybe a share of some other costs ? eg fencing, driveway etc
5. You may have a blended loan if the original property still has a loan. The valuation apportionment may apply to this. Provided you didnt also blend the build costs for the new build making a mess of it.

As tax is a fairly significant issue for any property issues I would seek personal advice.

 

Thank you Paul, yes I agree, we will seek prof advice locally. We appreciate your time very much.

 

Tip - Avoid "local" advice and seek quality advice. Property savvy tax expertise isnt as common as you may think. There are loads of posts concerning this problem and poor advice on PC.

 

Thank you kindly.