I have an IP in NSW, bought in a Discretionary trust with a Corporate trustee. which I have renovated and rented. I am also in the process of sub-dividing the block and building a new house on it. The current plan is to retain both houses, but if I chose to sell either or both once completed, what sort of capital gains tax would I have to pay? Would I have to pay GST on the new house, and would it be 10% of the build cost?
I am trying to work out if I would be better off to sell them to realise the equity I created or just keep them. By the time the new property is built and sub-divided I will have owned the original house for over 12 months.
Jeff.
If the reno was substantial then it could be deemed 'new' and GST would apply to the sale. GST on the full sale price perhaps. If subdivide then build the new house will also be new (der!) and would have GST if sold. But you may be able to claim some GST paid on materials back if the trust is registered.
With trusts the income flows through and the beneficiaries usually pay the tax. But CGT may not apply if you are developing.
You need specialist tax advice, preferably from a mate at a BBQ.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for that. As I thought, I have a more complicated one. looks like I need to start hitting the BBQ's haha.
Jeff.
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