How is the buy price aportioned for a subdivision when calculating CGT

Discussion in 'Accounting & Tax' started by Keentolearn77, 6th Sep, 2016.

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  1. Keentolearn77

    Keentolearn77 Well-Known Member

    1st Sep, 2016
    I'm trying to chase my accountant for an answer but I need a ball park figure re CGT

    example - I purchase property for 500k

    - I subdivide property in 1/2, front existing house, and build new house on back 1/2 for 300k

    - I plan to imminently sell the front house for 600k

    Assume I'm at the highest tax rate. and I know that there are probably a lot of other figures...
    All the online CGT calculators don't tell me how to factor for subdividing the land in 1/2.....
    Does that mean I basically have to cut my purchase price in 1/2? to 250k?
    ie: in basic terms ........ 350k CGT = approx 80k tax...?
    I'm guessing and hoping it cannot be quite like that - surely not that much

    How is the buy price aportioned for a subdivision when calculating CGT
  2. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    18th Jun, 2015
    CGT probably won't apply.

    Assuming it does,

    get a valuer in and work out what each block is worth. This should give you a % which u can use to apportion the original price and costs. Any specific costs to each block should be taken into account for the cost base for that block.

    You cannot cut in in half because one block has a house.
    Perthguy likes this.
  3. Rob G

    Rob G Well-Known Member

    16th Oct, 2015
    Modifications to cost base and reduced cost base.

    s.112-25 ITAA97 apportionment rule ... use a reasonable basis (not just a market value basis as in s.112-30).

    See TD 97/3 for the Commissioner's position on what is reasonable in the circumstances of part disposal of subdivided land.
    Terry_w and Perthguy like this.