Hi,
What happens tax wise in this situation.
Buy an old house on a large block for $400,000.
Renovate the house and subdivide backyard.
Sell the renovated house on a smalled block for $400,000.
Keep the block of land that was subdivided off.
Assuming its not my primary place of residence is there any tax payable here ?
Also,
What if the house was sold for less than $400,000 would that count as a capital loss ?
Are the renovation and subdivision costs tax deductable?Thanks,
Mark.
There sure would be some tax payable. Depending on how you do things it would be either income tax or CG.
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
If you spent money to renovate and its not PPOR you should be able to add the cost of improvement to the cost base of the property
unless you rented out the property and claimed these costs against rent income. You can't do both !
With the land when you sub divided it the cost base for the land would halve in value and increased the capital gain.
Also if the renovation was substantialthen GST would be involved
I did answer a similar question in a previous posting with relevant ATO web site links.
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4330030
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4329878See cost base info .
http://www.ato.gov.au/individuals/content.asp?doc=/content/36902.htm
http://www.ato.gov.au/individuals/content.asp?doc=/content/36902.htm
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