Hi
I have had a rental property for 5 years,
I Have recently commenced subdivision permit process for the block.
I am currently building a new dwelling at the rear of the property that I plan to keep.
I am financially strained and want to sell the front, long existing dwelling.I am wondering even though I have had the property for 5 years, if with me only recently progressing with a subdivision permit, do I need to wait for 12 months before selling the front existing dwelling to not trigger a CGT event (ie: wanting to ensure 50% cgt disc) , or am I worrying about nothing…
If you have any other tips / advice / considerations that I should be considering in these circumstances pls feel free to elaborate.
Cheers
There is generally no CGT on subdivisions – but just income tax. Don’t forget to factor in GST too and you also need to consider structuring the loan so as to maximise deductions. you need specific tax advice.
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
I agree with Terry see a good property accountant and lawyer. (he is one of the good ones btw) But I had an investment for a few yrs ago and did this and I didn’t get taxed at income, I got to use CGT discount and apportion the amount of profit based on the percentage of the property that I sold (ie around half). It was a few yrs back not sure they have changed any rules recently but my brother got the same advice doing same thing with different accountant so look into it.
This might help, at least for background reading.
http://www.bantacs.com.au/booklets/How_Not_To_Be_A_Developer_Booklet.pdfBuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
PS I think it is about intentions, ie if you bought raw land with intention to subdivide it won’t be cgt it will be income no matter how many yrs it takes. If you can demonstrate it was primarily income producing investment and subdivision is an afterthought I think it might sway the other way but don’t take my word for it I am NOT an expert on that.
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Thanks Terry
If I am keeping the newly built dwelling – I plan to keep it permanently as a rental property – Am I right in saying that eliminates the need to consider / factor GST.
You should consider GST still. It may not apply on the eventual sale if after 5 years, but there are other issues.
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
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