divorce and selling post knockdown rebuild

Hi all, i need some advice/clarity around CGT with the following situation.
My wife and i bought a property in 09 and lived there as our PPOR for the last 8 years, in March we commenced a knockdown rebuild and since then have decided to now get divorced. We want to sell the property but i cant find advise on whether we have to CGT on the sell price?

 

There should not be any CGT as long as you have nominated another property as your PPOR.

Unfortunate turn of events though.

Will you finish the build ?

 

We are currently living with inlaws till the house is completed.

 

Was the intention to move back in or is this a profit making intention ?

The concern I have is the MRE ended when you moved out and cant continue as the property is NOT the same CGT asset. You cant use the absence rule since it wasnt a dwelling in that period. You must (Both I believe) now reside in it once again after completion and also remain resident for three months I believe in order to trace back and cover the construct period with the MRE. s118-150 ITAA97

There is a special rule if one of you dies but not for divorce I'm afraid s118-155 ITAA97. This rule means you both must reside for 3 months or the CGT exemption may be lost (whole or a share ??) . I have never see a test case on that specific view and a ruling may be needed to determine if the ATO would accept one owner as satisfying the test.

 

Intention was to move back in. It was going to be our family home

 

Excuse my ignorance Paul, MRE?

 

I'm confused - are you still living with your wife at the in-laws?

 

Yes, living wife my wife at her parents place whilst going through a divorce and halfway through a divorce. and the kids dont know and neither does her dad. #messy

 

Main Residence Exemption for CGT

 

Bad luck. Intention pays no part.
The asset is a block of land and a new build and unless you reside in it for three months after completion its a taxable CGT asset (2 actually). Apportioning between discount and non-discount gains may become complex if you dont reside there too. Its possible only one of you needs to reside there....That may be a sound strategy depends on the extent of the gain.

There may be a state land tax concession for land intended for a principal place of residence BUT some states require that it actually becomes so or the concession is lost and tax applies. If its NSW clause 6 Revenue Ruling No. LT 082 Version 5 | Revenue NSW
MAY exempt you however I have a concern your intention has changed and at 31 December 2017 your intention may not comply (if your intent is now to sell) so you may need a OSR ruling on your position unless a sale settles before then.

The good news is that it seems you arent doing this for profit making purposes etc and no GST applies to a first sale of new resi premises if you arent conducting an enterprise but personal tax advice may be needed to verify this concern BEFORE you list the property (as the contract may need to address it)