Hi all,
If a first time developer uses his own land (PPOR to be knocked down) to build two townhouses, then lives in one, but intends to sell the other, would CGT (or any other tax) apply to the second townhouse when sold.
Thanks
Yes
assuming you sub divided land the original half with the PPOR CGT exempt as main dwelling
However the other new sub divided land has a cost base of 1/2 the original land value when you purchased it.
and no longer is exempt from CGT
http://www.ato.gov.au/corporate/content.asp?doc=/Content/00150720.htmGST would also be involved for the new building if sold.
Your cost base would be the market value of the land prior to the subdivision plus costs incurred in the subdivision and of course the construstion of the units, not the purchase value of the property.
You should seek advice based on you situation if the sale of the first unit would constitute a capital gain or assessable income. You may also be required to register for GST.
If the second unit was used as a PPOR you would be eligible for the main residents exemption.
Thanks for the link Duckster. Very useful.
Will look further into it. Thanks wilmaccacc
mccoz
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