Subdivision and CGT

Viewing 7 posts - 1 through 7 (of 7 total)

hoarel
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@hoarel
Join Date: 2003
Post Count: 39
May 23, 2004 - 10:27 pm
Can anyone help with what CGT may be payable on the following scenarios.
Buy a house on a double block for say 100K, sell off the extra block for 50K. Is there any CG tax payable anywhere.
Buy 10 acres of land with 2 titles. Sell 1 title to recoup some money. Is there any CG tax payable at any time.
Thanks in advance for any help.
Dreamcatcher
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@dreamcatcher
Join Date: 2004
Post Count: 5
May 24, 2004 - 3:45 am
Hoarel,
Good question – and perfect timing for me! [biggrin] I also am interested in the answer as I have a sub-dividable block which could seed future purchases.
To add to your question: What about the subdivision costs!! How can they be best apportioned?
I am sure the answers are out there. [buz2]
Good luck with your venture. [thumbsup2]
MJ
DD
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@dd
Join Date: 2004
Post Count: 508
May 24, 2004 - 3:54 am
As subdivision costs are usually quite high depending on location, be careful to know your councils actual costs before working out your profit.
You might be happy or dismayed. Hope its the first.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Richard Taylor
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@qlds007
Join Date: 2003
Post Count: 12,024
May 24, 2004 - 11:05 am
hoarel
The simple answer is YES.
You would normally calculate your capital gain on the square meterage area of the subdivided block.
Assume that the land value of the 2 blocks is 1000 Sq M and that you sell off 400sq M. The capital gain would be calulated on 40% of the difference between the original ULV and the sale price.
I.E.
The land value of the total project is $200K and you sell off the 400SqM block for $160,000. Your Capital gain would therefore be calculated on $80K.
Cost price of 400 sq M = $80K
Sale price = $160K
Capital Gain $80K
With regards to subdivision costs these can be relatively high and I would suggest that you discuss the matter with a surveyor first. Council Headwork and Park contributions can spoil a deal once you have set you budget so plan first before proceeding.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.au
There is no such thing as a problem.
Just a solution waiting to be found
Richard Taylor | Australia's leading private lender
hoarel
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@hoarel
Join Date: 2003
Post Count: 39
May 29, 2004 - 12:15 pm
Thanks 007,
Your answer makes sense if the land was vacant. Do you think there would be a different answer if one of the blocks had a house on it. Would you then need to take into account the land value and the house value to derive the percentage that would be accessable for CGT?
Luke…
madhun
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@madhun
Join Date: 2004
Post Count: 29
May 30, 2004 - 3:56 am
This all changes if the parcels in question form part of your PPOR.
If that is the case CGT does not apply.
Richard Taylor
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@qlds007
Join Date: 2003
Post Count: 12,024
May 30, 2004 - 8:14 am
Madhun
Hate to disagree with you but i think you will find it makes no difference if you subdivide your residential property and sell off part of it then you will be liable for CGT.
Again it is based on a percentage of the overall land size that is being subdivided.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.au
There is no such thing as a problem.
Just a solution waiting to be found
Richard Taylor | Australia's leading private lender