Me again. If I now build two new townhouses as an investment, what can I claim taxwise. I understand I would now pay gst, but I would be able to claim it back wouldn’t I. I have my own business (not building) and an ABN, would I need another ABN for this new venture or could I use my existing one. Would I then pay the gst and claim it back, then pay gst when I sell the townhouses? What is the margin scheme I have heard of it before but have no clue. I believe I can claim depreciation on the new house, does anyone know how this works, approx what % of final build price does it work out at. If I build as a personal investment do I only have to pay CGT on 50% of profit, what do I pay if I build as a registered builder? Any insight anyone can give me would be appreciated. Obviously I would talk to my accountant but I am trying to do initial figures on a property to see whether it would be worth doing
Fern
Hello Fern
Basically the margin scheme is about paying GST on the difference (margin) between the cost and sale prices rather than on the whole sale price. Lots of ifs and buts.
Here is a link to the GST margin scheme explination on the ATO site.
http://www.ato.gov.au/taxprofessionals/pathway.asp?pc=001/005/018&mfp=001/005&mnu=10409#001_005_018
Regarding your question about CGT. I am not an accountant but think that while you, as a private investor, would be entitled to a 50% discount if you hold the property longer than 12 months, this would not be true if you are a registered builder. As a registered builder it would just be seen as income.
Hope this helps [smiling]
ElkaThanks very much for that Elkan. I wonder if you are in a defacto relationship you can ascribe your earnings on a joint venture to the partner that makes the least money the way you can in a marriage. Anyone??
Fern
Hi
As for the building depreciation….
Allow about 5-8% of the building construction cost as your first year depreciation….(of building plant and building) as your deduction.
It will vary depending upon the finishes you use.
Regards
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