Subdivide PPoR then sell the old house (unit 1) to fund the construction of newly created unit 2

Discussion in 'Development' started by Kevin K, 10th Jan, 2017.

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  1. Kevin K

    Kevin K New Member

    Joined:
    10th Jan, 2017
    Posts:
    1
    Location:
    Australia
    Hi,

    I hope someone can help me with the issue I'm currently having. I bought my house in 2010 and now want to subdivide it into two blocks (the front block contains our house, and the rear block is a land parcel which I intend to build). I would like to sell the front block so that I can have the fund to construct a new house at the rear for me to live in as Principal Place of Residence.

    My question is
    1- When I sell the front block, do I have to pay capital gain tax? I thought I don't have to since it is my PPoR and I sell it as an old unit. Please tell me if I am right or wrong.
    2- Say after 3-4 years of moving into my newly constructed unit, I decide to sell it as well, am I liable to pay CGT this time? I know that for the period of me moving in until I sell it, I am exempt from CGT as it is my main residence but what about from the first time I got it to the time I subdivide (during 2010-2017) will it consider as my non-main residence day?
    3- Am I liable for GST when I sell my second unit under 5 years?

    Your help is very much appreciated.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,672
    Location:
    Australia wide
    1. You might be right, it depends.
    2. Yes CGT or income tax.
    3. Possibly, it depends