Hi All, We are mom and dad investor who recently stepped into the development game. I found an abundance of knowledge in this forum and really grateful for that. We currently building 3 townhouses with the couple of scenarios in mind for the ending. The land is registered under my name only i.e. main income producer Sell one to reduce total debt, this is originally preferred scenario and we are prepared to pay GST (with margin scheme).However my understanding is there also an income tax assessment where potentially paying 45c per $1. This could lead to another contribution north of $100K, which I am very reluctant. Move in to one of the townhouse and claim as main residence and stay for a period of “X” and finally sell it to reduce the debt. With hope of claiming the exemption. My question, is there any minimum period of “X” and also appreciate if anyone can share their experiences. Thank you all.
Seek personal tax advice. Read TD 92/135. It provides guidance that the main residence exemption potentially wont apply as the premises dont start to be a CGT asset. And the sale of the other two could be subject to GST in some cases and its possible tax credits on the build could expire etc. I try to limit responses so it doesnt lead you. Rather the personal advice will be specific and based on fact and circumstance. Our developer toolkit also provides good reading prior to advice so that you are aware of the issues to asisst advice
Hello Paul, Thank you for your response and the toolkit. Will definitely thoroughly read it tonight. Cheers.
1. Yes we found out the hard way that no CGT discount on sale. 2. we knocked down a very old place to build our PPOR (lived there 4 years already) and two more townhouses. Sold one to reduce debt. Paid tax / no CGT discount. will read TR to see what happens when we eventually sell out PPOR
Thats possibly OK if it was your home for a demonstrated period of time if that was te intention at start. It demonstrates intention for one element to be your home. Very different to someone who does the build and sells off "their home" after 6 months expecting tax exemption. Moves into one of the other lots etc. The ruling is very simple in its explanation !! And it uses a basic exemple of a "builder" which can also mislead people into thinking that it doesnt apply to them
