If I buy a building site on Jan 1st 2004, then sell my principal place of residence on September 1st 2004. Then rent a place and build on my new site and move into my newly built home in February 1st 2005. If I sell my new home in June 2005 (after living there for four months), will I be liable for CGTax on my new home which has been my principal place of residence since I sold my previous home on September 1st 2004, but considering I have owned the land since Jan 1st 2004?
Dunno. But there is a tax ruling which states you can count two places as your main residence, for tax purposes, for a max of 6 months.
If you are constructing a dwelling, there may be additional rules.
Terryw
Discover Home Loans
North Sydney
[email protected]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
HI sixpac,
Not an accountant but here goes.
The property you sold September 1-04 is CGT free as it is your PPOR.
The block bought on 1/1/04 isn’t CGT free as you have a declared PPOR which you sell on 1/9/04.
You can transfer PPOR status to the block from the moment you sign a contract to build a new home. However the ‘dual PPOR’ rule of 6 month will apply. You will not get full CGT exemption on the block as the overlapping period is more than 6 months.
The new house once completed will become your PPOR and as such is CGT free provided you live in it for 3 months.
As an aside it seems to me you rae buring a lot of money in builders fees and costs and real estate agents fees.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanks Terry and Derek for your info.
Derek, I must mention that the dates I quoted are hypothetical. I used them just so I have something to work on.
You are correct when pointing out that there are costs involved with agents and fees and duties, but in this case I will be an owner builder, so there are no builder overheads or profit margins to account for in the second house.If I understand you correctly, it would be prudent for me to establish values of comparable building sites at the time that I sell the house in Sept 2004 so that a realistic increase in land values can be determined from the time I bought the land (Jan 2004) until it became eligible for my new PPOR, (Sept 2004).
Thanks,
6pac.Hi
I have now found all the answers I need on the following URL, under the heading
“Constructing, renovating or repairing a dwelling on land you already own”
[grad]
Thanks for the help.http://www.ato.gov.au/print.asp?doc=/content/10675.htm&page=9#P1791_176650
Interesting
Here is an example from 6packs link:
Example
Choosing to claim exemption for the land from the date of construction
Grant bought vacant land on which to build a new home under a contract that was settled on 3 September 1997. He bought his previous home under a contract that was settled on 3 November 1991.Grant finished building his new home on 8 September 2000. He moved into it on 7 October 2000, which was as soon as practicable after completion. He sold his previous home under a contract that was settled on 1 October 2000.
If Grant wants to, he can:
treat the new home as his main residence from 3 September 1997, and
claim the exemption for his previous home from 3 November 1991 to 2 September 1997.
Both homes are also exempt from 1 April 2000 to 1 October 2000, the date Grant disposed of the old home. This is because the maximum six-month exemption outlined in the section Moving from one main residence to another also applies.Terryw
Discover Home Loans
North Sydney
[email protected]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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