Tax - IP to Main residence - Demolish and Rebuild

How would this work tax wise please?

Purchase Price $305,000 in 2004.

Last bank valuation $650,000 when it was main residence until 1/7/2015. HTW

Latest WA land valuation came in at $660,000. 2019.

2019/2020 has been lowest prices in the suburb.

It’s tenanted at $300/wk for the next 3 months? (Dependant on tenants build finish).

If I sold my current main residence in around 4 months and made that my main residence, Moved in for a couple of months before being demolished and built a new home, I’m wondering how it would be calculated in future taxwise?

How would tax be calculated if I subdivided and sold in ten years? It’s currently a triplex site, or one green title, two strata. Etc

I was thinking I read an article that if I demolished existing home before living in it for twelve months the tax would be treated differently if I sold in the future than demolishing with a couple of months, but can’t find any info now.

I’m guessing I couldn’t claim any scrapping when demolished as no longer a rental?

The property is only getting $300/wk, needing some work and neutral but we’re needing a bigger block and land this size but very hard to find.

 

lots of tax issues
Could be 2 CGT assets - the land and the dwelling..Need to apportion based on time period also.
Could never be CGT exempt it seems

 

Thanks, Yes it’s complex. I need to have a really good think!! The property is in my husband’s name and he’ll be 67 in 16 years time. It’s possible he may not be able to physically do his current work or be employed until retirement. There could be income producing opportunities on the block also, eg parking for fifo workers, caravan/boat storage, I may start a home nursery business, etc.

We have become less interested in living off rents in retirement so really need a big picture plan.

 

And dont ignore the superanuation benefits of the downsizer contribution opportunity which could even be available. A comprensive tax plan should be given advice as there are many complex issues to consider.

 

the demolition can cause a major issue for the main residence exemption so worth getting some advice on that.

Mr Dixon has lived in his property with his family for 15 years. He does something that results in him paying tax when he sells !!!

What is Mr Dixon's problem ?

Mr Dixon and his family live down the road from Bob. They purchased a lovely 4 bedroom home on a 1,000 sqm block about 15 years ago. The area has really grown and new developments are popping up everywhere.

Mr Dixon decides it is best to carve up his block and sell it. He applies to council for a DA (which is quickly approved), demolishes his house and sells the vacant land

Mr Dixon thought he would pay no tax on sale as he had lived in the property for most of the time.

He didn't realise he made a fatal mistake and most of that gain is now taxed.

 

Could even involve GST. If Mr Dixon has a large lot and recognised the potential value in subdividing and sale he would sell all three lots and GST likely apply. If it was sold with the house intact and habitable for residence and with DA approval to subdivide it could be 100% tax exempt and no GST either

 

What about if you apply for subdivision and sell of the rear battleaxe plot while keep the front ppor and continue living in it? Tax implications?

 

yes and main residence exemption cannot apply to the sale of the rear battleaxe plot