PPOR conversion to build to build tax consequences

Hi,

We have lived in our PPOR for 4 years and have moved to another place.
Plan was to originally sell PPOR, currently would be at a capital loss.

Option would be to rent for a period then build then sell immediately.
Current house bit old and small, would be a bigger market for new house in the area so the build should hopefully be profitable, including time/effort.

1) If there is a capital gain at the end of this, will it be apportioned to period where it was an IP vs PPOR?
2) And would the 50% capital gain discount apply if i build and sell immediately ?
3) And the building costs would go into capital base presumably?

Any other suggestions given current situation?

Thanks!

 

1. no
2. probably has you have held it more than 12 months
3. yes

 

Regarding 1,

So having at a PPOR initially provides no benefit in discounting the capital gains rate at all?
For example say i held it for 20 years, rented out for 1 year and sold it?
Surely wouldnt get charged a capital gain for the whole period? Or would i?

Surprising!

 

you asked the wrong question it seemed.

The cost base of the ppor would be the value on the date it is first income producing - plus other cost base expenses after that.

 

Selling immediately after sale I doubt a CGT discount applies to the portion of the sale that is the new dwelling and is also a isolated profit making intention. Why doing that ?? Could be an enterprise and trigger a GST issue too. Its more than a mere-realisation. The asset is only created when it is completed !! The 4 year rule which backdates a property to the date construction initiates wont be able to be used.

Just because it was your home doesnt mean its a CGT sale. The land portion would be a separate CGT asset and its portion may be discounted but if a loss than there is no discount anyway.

Hope this demonstrates the need for personalised tax advice. It is a example of a complex situation that only experienced advice would consider.

 

Thanks guys, more complicated than i thought.
Bit rusty on RE issues but will have a read up on some of those issues.

Input much appreciated