Not sure where this goes, so I also put it into “accounting”.
We will see our accountant about this but someone has just made an interesting comment and we want to know if any of you can help.
Is there a minimum number of lots that can be subdivided before you are actually known as a “developer”? It has been suggested to us that once you become a “developer” you pay much higher tax and there are also more “developer” fees involved.
We are looking at dividing into six lots, one of which will be our primary residence.
If we divide one block at a time over a few years, does this make a difference to becoming a “developer”.
Help!
LesleighHi there
Not sure who told you that you pay more tax but i regret to say that an occupation des not define the amount of tax you pay.
Certainly as a full time developer you income would be treated as Trading Income rather than a Capital Gain and depending on how long the property had been held could make a difference to the amount and type of Tax payable.
A property purchased and renovated / subdivided etc and subseqently sold may qualify for the reduced rate of CGT which can be as low as 10% however if your occupation defines you as a Developer the halving of CGT will not be applicable and you will be taxed at you or your entities marginal rate.
Cheers
Richard Taylor
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Hi Richard
Thanks so much for that info. We didn’t think we would have a problem as we are dividing into six – selling two and building on three (to become rentals) and the sixth will be our PPR (Really Big Time Developers, ha ha). Just wanted to make sure, though! We have spoken to so many different people and are about to “take the plunge’, which is making us a BIT nervous.
Thanks again
LesleighOriginally posted by Qlds007:
[A property purchased and renovated / subdivided etc and subseqently sold may qualify for the reduced rate of CGT which can be as low as 10%
Hello Richard
Can you please explain the statement above. How can CGT be as low as 10%.
Thanks
ElkaOriginally posted by elkam:
Can you please explain the statement above. How can CGT be as low as 10%.Just for fun, I can think of one scenario – if one has no other income and makes a capital gain of $100k, then with 50% CGT discount, his total income is $50k, on which the tax would be $10,350. So the effective tax rate would be 10.35%.
If the capital gain is less, the effective tax rate would be even lower.
Cheers,
Donhi Lesleigh
just another side line to this post is that if you try to open an account with westpac( and they not a small bank as you will all be aware) and you say you are a developer which I am there is no field under occupation so ypu have to go into management construction.
so there is no sure occupation as a developer.
so my kids maybe right that I am unemployed as my occupation is null and void.
as for the post if you put a garage on the back of your ppor technically you are a developer as you have developed a property.here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]
currently looking for up front money at 15% p/a pm me if you wishGR, you bum!
[biggrin][biggrin]
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