no cgt on this transaction?

I bought an existing house which came with a seperate block, separate title but all sold as one. Paid appropriate stamp duty as one transaction. Rented out original house, built new house on other block and rented that out too. Now, if I sold the original house, I would actually be selling at what looks like a loss on the original purchase. Q: would I be up for any cgt??

 

You would need to apportion the costs of the house out of the total purchase price when calculating the gain.

 

Yes it would be a CGT event.

 

The cost base for the two distinct portions need to be determined. As Ross said a valuation will be needed to "apportion" the original costs (purchase + legals+duty etc) using a reasonable basis that makes allowance for the character of each piece of land. Only a reg land valuer is qualified to do that. Then to the new lot you will likely have capital costs such as the new build, etc etc. Some of these costs may need to apportion between both lots and others wont (eg fencing may, driveway to rear may not).

The cost base will be needed if and when you sell either or both blocks one day. And even for GST purposes if you sell the new build within the next 5 years after tenancy commences.

It may also be worth seeking personal tax advice on the sale. The front old house wont be subject to GST IF it was and remains a residential tenancy and you sell it. But depending upon the whole timing and purpose of this project it could also sometimes be argued you have undertaken a limited development to profit - Profit can mean more than selling everything. In which case selling the older house may actually not even be a CGT event. Full income tax could apply. And penalties can apply if you get it wrong.

Buying a property and planning a new build and selling off part of the site asap rings alarm bells for a isolated profit making transaction.

 

Two separate blocks side by side. New build on the one block rented and not intending to ever sell so doesnt come into equation at all. I live off rents and didnt intend to sell existing house either but now would like to sell and purchase a doer upper for profit (which would be taxable). Purchased June 15 existing house and block next door seperately fully titled for $430. existing house worth at that time approx $330, so the block with its own title purchased for approx $100. probably really worth $150. If I sell original existing house for $350, would I (as an educated guess as I would talk to my accountant) incur cgt?

 

Yes

 

CGT basis seems reasonable but your basis for apportioning is incorrect (bold).
Your intention for the new build is to keep sure but if it could be considered your intent was to sell the old house after then CGT may not apply and it would be profit taking !! Selling the old place so quickly does seem in many respects to be taking a profit. Selling so promptly raises this issue.

Apportioning cannot be made on basis of deducting one for other. A valuation to apportion the actual cost is required.

All property sales are subject to tax (CGT) unless it is exempt. Renting out is not exempt unless it was a former home and in the facts that cant occur. So CGT will occur. Its now a case of how to minimise it correctly.