Hi, can any one tell me if you build on a block of land do you have to wait the 12mths from buying the land or from the completion of the house to save on the capital gains tax.
Not sure what you are asking? CGT is generated from when you sell….
If you sell a property before 12mths you pay 50% more in capital gains tax. But I’m not sure if the 12mths starts from the time of purchase of the block or when you have finnished building the house on it.
Hi, I was told it’s from building which probably means completion.
I’m not totally sure about this but my accountant had been murmuring about it.Raises some issues:
1) what do you do in the intervening months? Rent?
2) GST will still apply. In which case, why not wait out the 5 years & not have to pay GST?Will surely appreciate it if anyone could add some more opinions/facts/ideas.
Good luck,
Kum YinIt’s 12 months from land purchase contract date to sale contract date.
Not sure what you’re are talking about with GST, as GST is only applicable if you’re carrying on an enterprise, and also what is the 5 year period to not pay GST?
Or does the ATO treat it as two assets:
a. the land
b. the new house
if so there would be two different dates
Quote: If a dwelling was not your main residence for the whole time you owned it, some special rules may entitle you to a full exemption or extend the part exemption you would otherwise get. These rules can apply to land or a dwelling if::::
you are yet to live in the dwelling but will do so as soon as practicable after it is constructed, repaired or renovated and you will continue to live in it for at least three months”The way I understand it you are fully exempt if it is your own dwelling and live in it for a minimum of 3 months after construction, that look correct?
CGT is calculated from the contract dates as Trajik points out.
If you sell a property before 12mths you pay 50% more in capital gains tax. This is only applicable if you purchase the property in your personal names. Purchase it is Super and the rate is 15% before 1 year and 10% thereafter.
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ummm
splitting hairs here, but…….50% more?
I think you mean tax on the other 50%……big difference
http://www.posigear.8k.com
Positive Geared Share Investingif you have built a spec hoime with the intention of just building and selling for a profit, then you are conducting an enterprise. As such you will need to register for GST and remit accordingly. As you are conducting an enterprise, CGT does not apply, however the net profit will need to be included in your normal assessable income.
if you are more of a property investor i.e. your business is renting properties out, you could argue that you are just realising one such property. hence the you would need, to be extra safe, 367 clear days from the date you signed the contract to purchase the land till the date you signed the contract to sell the land (regardless as to what is sitting on the piece of dirt at that time) to be eligible for a CGT reduction. then you will just need to argue your case – should the need arise – that you are indeed a property investor not a trader.
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