Hi all, Using the search function I couldn't find this specific scenario so I thought i'd ask the guru's here (to also improve our body of knowledge). Let's say you have a vacant block of land and you build a torrens title (NSW) dual occ. The site acquisition and associated costs plus the total construction costs would equal (or probably exceed) the end value of one of the dual occ homes. You decide to sell one of the dual occ homes and keep the remaining one which is rented out. All 'profits' would be quarantined in the second home that has been kept. Site acquisition is in individual names but construction loan can be in a company name. In a general sense only, what sort of tax situation would apply after selling the first dual occ home (GST?, CGT although not sure here as you'd be selling at a loss, etc)? Cheers Al
Let's say the site costs $1.3m (including stamp duty, legals) and the total build cost for the dual occ is $850k. The sale of one house is $1.75m. The other house is kept and rented out.
Is your cost base not going to be: 50% * $2,150,000? GST (assuming margin scheme used) - 1/11 * ($1,750,000 - $1,075,000) Tax on profit or CGT? @Paul@PFI
Loads of issues impact - Costs need to be apportioned so that the land value and construction comprises two dwelling. Possible 50% each but depends on design - All build costs - GST on costs ?? If being sold some or all of the GST on costs may reduce costs and add to profit - Margin scheme ?? Again may affect things. - I didnt get the company issue - That could be a good or bad idea ? - Loads of further issues if you keep one. Note this doesnt end GST or tax issues. The GST issues with the company setup however could impose a cashflow issue. Depending on the dev there could also be a CGT event for the land !! This may allow access to the 50% CGT discount and affect calcs too... Are you using market value or actual land costs.....Tax advice needed on that Most of it but not all is explained in the developer toolkit attached I'm never surprised when people start a multi million dollar project without running the numbers based on tax advice and tax planning.
More like Cost 50% x $2150000 per property. GST 1/11th x ($1.75m less $650K) * for one lot being sold. LESS : 50% of GST ** on build IF margin scheme is available and in contract. Profit per property $1.75m less GST in * above less 50% of costs as above reduced by GST claimed on build as ** above. Depends too on your choice of the land value when dev commences or its actual cost when acquired. One strategy may allow you to factor in market value and take a CGT gain on the land at the time the dev starts...50% discount on that and it allows a reduced profit subject to ordinary taxation.
