Selling my Main Residence - Any CGT implicatios to Consider

Hi Everyone,

I engaged a builder to build a Duplex for me on my vacant block of land I had purchased. After the Duplex construction was complete, I moved into 1 of them and have the rented the other side out. I have lived on my side of the duplex for almost a year, however it is a bit to small after I gave birth.

Issue is in order to sell the side of the duplex I was living in, I had to lodge a plan of subdivision to create separate title for each of the duplex and to be able to sell my main residence side.

My questions:-

1) If the contracts is exchanged in 2 months from the actual subdivision date (Plan registration date), would this mean there would be potential CGT implications as I had not technically lived in the main residence since subdivision date for a minimum of 3 months - even though I had live in the duplex for almost 1 year since the construction was finished however the actual subdivision did not occur until some 9 months latter. The folio identifier was created only 2 months before the proposed settlement date.

2) as the primary residence would be only 1 years old (will be less then 6 years old), would I need to worry about any GST implications even though I lived in the property for 1 year.

I will appreciate any speedy response to my Query.

Thank you

 

yes to both
First thing to determine is if is capital or revenue assets. If revenue then the main residence exemption cannot apply at all. If capital then you must live there for at least 3 months after completion of construction.

 

Hi Terry,

So I had lived in the B unit for 11 months between the actual occupation date and the settlement date.

however ever there is only 2 months between the subdivision date (date the actual folio identifier of the B unit was created).

Would this still make the subdivision date irrelevant.

 

Subdivision is not a cgt event and generally doesn’t change anything. If you mean you lived there after occupancy certificate was issued but only 2 months since separate titles this shouldn’t be an issue for cgt as you have lived there more than 3months

but seek specific tax advice

 

vacant block of land...does the 4 year construction rule apply ?

key to the CGT and GST issues are intentions at the begininning.

 

I dont beleive the answer can be address with a yes / no. Personal tax advice would be very wise.

TD 92/135 is a ruling that is reason why the sale of the home may (or may not be !!) a concern. The advice should ensure all the factors are documented and considered.