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Save CGT when building duplex

Discussion in 'Accounting & Tax' started by Ivory, 28th Sep, 2016.

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  1. Ivory

    Ivory New Member

    Joined:
    28th Sep, 2016
    Posts:
    2
    Location:
    Sydney
    I purchased a house which can turn to duplex on Dec 15 at 1.45 mil.

    This property is currently renting out and I want to knock it down and build 2 duplex on year 2020.

    My question is :

    How can I claim negative gearing for about 2 years and turn it to my main residence?

    Can I keep both duplex as main residence ( I own one and my husband own the other, parents from both sides will move in + kids)?

    If I do so, when I sell it, do I still need to pay CGT?

    Looking for professional advice.


    Thank you in advance.
     
  2. Phase2

    Phase2 Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    421
    Location:
    Perth
    Hi Ivory, and welcome to the forum! :)

    There are people on this forum who I'm sure can give you some general advice. @Terry_w springs to mind, he's already posted a huge number of excellent "tips" for free on here. I'd suggest doing a search and having a read through them.

    The request for professional advice, which needs to be applicable to you/your families circumstances won't come free, and nor should it. This forum is a good starting point though.
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,374
    Location:
    Sydney
    Its possible that your reasons for buying the property revolve around the intent to develop and it would mean that CGT is irrelevant. Ordinary income tax may apply. If you used the property as your main residence TD 92/135 may apply which doesnt allow the exemption.

    Definitely a case of seeking personal advice. Our developer toolkit helps explain these issues.

    Tip : If land is currently owned by hubby and wife then you cant split duplex into one for each of you. Doesnt work that way. Its a duty, tax and GST trigger. GST will apply to sale/s too but planning and using the margin scheme may save a substantial amount

    The neg gearing will apply for the two years.
     

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  4. Ivory

    Ivory New Member

    Joined:
    28th Sep, 2016
    Posts:
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    Location:
    Sydney
    Thank you for your advise. I read Terry's post before I asked my questions.
    His tips are very good. But not fit my situation.

    Hopefully, i can get some more information and idea before i seek professional advise.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,982
    Location:
    Sydney
    1. You can claim expenses if the property is available for rent – as per normal
    2. You (or the owner) could possibly have both as the main residence if you live in both halves of the property as the main residence
    3. Yes you will probably need to pay CGT when it is sold because you are renting it out. But there is a chance it may be taxed as income depending on your situation.