Hi
I recently purchased a property in Alice Springs. It is zoned R2 which allows for unit development.
The house is currently my principal place of residence. The size of the land is approx 1000sqm, well enough to build another house next to it. My plan is to build the house and rent both houses out when the construction completes which will make them good +ve cashflows IP.
I like to know what is the tax implication.
Looking forward to your reply. Thanks.
Regards,
LiviwellIs subdivision uncommon?
To me it’s like getting a piece of land for free. Has any one considered that alternative?
Please share some of your experiences.
Cheers.
LiviwellTake care with capital gains tax as your ppor is exempt.
A unit site eh ?
I don’t Know Alice but it would be worthwhile to go to council and find out what exactly you could build on such a size block.
Spend $ 12 or so and buy the council’s unit code (which tells you about their rules).
In any event the townplanner would probably be able to tell you off the top of his head how many units can be built on a 1,000 sq. metre block as no doubt he has seen applications involving similar size blocks.
Your property may be worth more as a development site than as a house.
Secondly, you will get better value by buying an existing house than building a new one (in the event you manage to sell the property as a development site)!!!
To get the most profit from selling a development site it would be best to sell it with council approval attached.
This means that YOU will need to spend money on a surveyor and building plans, council application fees etc.
Cheers,
Pisces133
Oh, I forget to address the issue of tax.
I am not an accountant but I would imagine that
you would need to step carefully as I can just imagine that Mr Tax could well hold to the view that, from the time when you had the plans prepared, you acted in the capacity of a developer. I just don’t know what the situation would be.I suggest you phone the taxation department and ask the question and thence get your accountant to get a ruling on the issue if necessary.
If there is a problem (in that you may be liable for some tax) you would need to do some clever
thinking to find a solution for your problem.Cheers,
Pisces133
I have spoke to the land & infrastructure today and understood what’s involve in subdividing and obtaining the permits.
What I like to confirm is, will the newly developed home be subject to Capital Gains Tax and the existing property retains it’s CGT exemption as it has been my principal place of resident?
Please help[
]liviwell,
The CGT legislation can be quite complicated. Essentially your ppor will remain exempt. The taxes that apply to the new property will depend on your choice to sell or retain.Should you sell, the cgt will be applicable. The cgt event will commence from the time the slab is layed.
You will not be treated as a developer, as presumably its a one off, you are not registered for GST, and the project will be in your name as an individual.
Have you considered strata? This may be a cheaper and quicker solution.
David Femia
http://www.femiapropertygroup.com.auYou say you will rent both properties out once completed, it’s my beleif that tax considerations would only come in when you sell either properties.
Presumably as these properties are both now rented out you will have somwhere else as your PPOR ?
Am i wrong in this ??
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
if you sell the block of land/and or house you will be done for capital gains tax on them.
as the new block of land is a seperate entity than your PPOR you will be taxed as if you have just bought an investment property and sold it.
just remember to hold for 12months and 1 day and you should only be done for 50% of the capital gains on your new IP at market value. (this means you cant sell it for a dollar to your family)
liviwell,The CGT legislation can be quite complicated. Essentially your ppor will remain exempt. The taxes that apply to the new property will depend on your choice to sell or retain.Should you sell, the cgt will be applicable. The cgt event will commence from the time the slab is layed.
You will not be treated as a developer, as presumably its a one off, you are not registered for GST, and the project will be in your name as an individual.
Have you considered strata? This may be a cheaper and quicker solution.
David Femia
http://www.femiapropertygroup.com.auHi David
Could you please tell me how would strata be the cheaper and quicker solution. Thanks for taking time to answer my question, greatly appreciated.
Kindest Regards,
Liviwell
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