Tax Tip 43: Demolishing PPOR and Subdividing land and building 2 houses

You would be up for cgt in part because building on re cgt land.

May not be GST on sale depending.g OMA few things

 

Thanks for your input Terry. How do i know what ttigfers gst. Or is it best to talk to a specialist?

 

Look at the GST act.

 

Cheers

 

Correct question is....When would GST not apply ??
In the example cited I cant think of any other than after the property has been rented for 5+ years. Building to profit through sale is a enterprise.
There are a range of tax issues that affect this idea. Date of land acquisition may be important if its pre-CGT also. You may do more harm than good if the existing house is a pre-CGT asset.

Personal tax advice would be wise

 

A concern I have is fairly clearly (but vaguely over simplistic) may be found in tax determination 92/135....Build a duplex and sell one off and then say 2 years later sell off the other. ...Perhaps its not exempt.

 

Alright, I'm going to flog a dead thread here. Apologies for this. It just seems more reasonable than starting a new thread that addressing the exact same question.

In the above scenario, does the property have to be your main residence IMMEDIATELY prior to demolition?

For example:
You buy a property.
You live in it for six months.
You rent it out for a year and a half. At this stage any capital gains on the property are still tax free provided you don't have another PPOR under the six year rule.
You demolish and build a duplex.
You live in one of the completed duplexes for at least three months afterwards.
You move out.

Are there CGT exemptions for six years from when you moved into the completed duplex? (Provided you don't have another PPOR).

 

If the 6 year rule applies the property is still your main residence, even though you may still be absent.

 

No. You may be able to use the main residence absence concession to extend the concessions between the date you depart and the start of works BUT you must chose the ONE dwelling as your main residence. However once a habitable dwelling is destroyed then a main residence exemption ends.

The property then becomes land and that will add to the costbase of the two new dwellings built.

The main residence exemption can only recommence when the new duplex is completed. And it ONLY applies to the portion you live in.

I would recommend personal tax advice in your situation

 

If the second property was sold upon completion would income tax on the profit be payable instead of CGT?

 

depends

 

What would it depend on?

 

Lol

The facts of the matter

 

Example??

 

Keep reading

 

Enterprise?
Isolated profit making intentions
When acquired
Death
Purpose for sale

..Yep depends...On tax advice too

 

Tax Tip 175: Subdividing Land and CGT Tax Tip 175: Subdividing Land and CGT

 

Nice one, you fox. No such law by that name

 

the actual name is too long!
A New Tax System (Goods and Services Tax) Act 1999

 

ANTS 1999