Hi all, another CGT question.
How is CGT calculated when building and selling? Its simple when you buy an existing property and wait for the market to rise and then the capital gain is straight forward.
However, when i build on land, how does it work? If i spend $100k on a block of land, then $200k on a house, then sell it for $350k, is the CGT payable on the $50k?
Is this how it works?
Also, how does the 12month 50% concession apply for building? Is it 12 months from the end of construction?
I don't know, but will have a guess.
I think the 12 months would apply from the date of the contract for the land. So holding the land for 12 months or more should give you the discount.
The CG would be the profit, ie sale price less costs such as building and land etc. Then this is discounted.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Barney,
I was advised the start date for CGT is the date of the signed offer and acceptance.
So if you have an accepted offer on a pre release block of land and it doesn't settle for twelve months, the 50% CGT discount applies if you sell it strait away after settlement.
As far as building is concerned, I don't think it matters. It goes on the date you bought the land as the building is an improvement to that land.
But you better check that out with your accountant.
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