Do we pay CGT if we knock down and rebuild investment property to live in it?

As the title states. We own a property that has been rented for the last 8 years.
We want to eventually knock it down and build our own home to live in.
Does this cause any CGT event, or do we only have to worry about it if we ever decide to sell it?

Thanks in advance to all you tax gurus.

 

only when you sell it
But it could be CGT K7 for plant and equipment causing a capital loss

 

Thank you.
Sounds like if anything there is a tax benefit in the year we knock it down.

 

If you have a QS report there could be two events to consider. The plant and equipment items subject to depreciation may end their useful life and be scrapped when they cease to be held for use to produce income so on the last rental day they may be scrapped . The same view isnt held for the building. These plant items cannot produce a CGT gain or loss or CGT event as they are not CGT assets however a change to law in 2019 can sometimes treat the scrapping as a CGT loss if the assets lost their depreciation deductions at that time or after. The building works eligible for capital allowance deductions usually arent eligible for scrapping unless the property is rebuilt and used wholly to produce future rent. In such cases the scrapping of the building may affect the CGT costbase for the land used for the new build without tax deduction benefits.

There are very comprehensive reasons why you should maintain a record of costs for this build. It is explained in our developer toolkit. You will need these records for the costbase of the home and if you sell soon after completion or before ocupancy then records will be needed for the tax issues that could be triggered. Even death can be a problem and trigger changed tax issues. A taxpayer cant intend to build a home then die and use the main residence exemption.

Note that you will always have TWO CGT assets. One is the land and the other is the home.

 

keeping a record of those third element costs moving forward will be very important

 

First, second and third elements !!