Howdy, im new to the property game and am very confused about cgt.
If i buy a subdividable block with a house on it (to be my ppor) then split the block and build a new unit at the back, what is subject to capital gains?
So far my understanding is that only the land is subject to cgt, from the time the block is cleared to the time the new house is sold. Is this correct?If so, how is the exact date the profit making activity took place calculated? or could i pass off a 4×2 townhouse as a deluxe shed?
If you are buying with the intention to make a profit by sub-dividing, then CGT may not even apply – it would be general income tax.
Tax would apply on the portion of the land that is split off. It may only be the portion retained as the PPOR that is exempt. eg if you split into 4 then 3/4 of the land will be subject to tax.
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
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