Bought a Subdivision block creating a second property. Bought in 2 names of equal % ownership as Tenants in Common. Contemplating subdivision going through. That % ownership has now slightly changed – will obtain a valuation to show how much each property is worth. Implications? – stamp duty on the difference of what the % ownership was to what it will be at subdivision. Anything else?
Did you have a deed of partition set up? If you end up with one property each that would be a change of title and a dutiable transaction. CGT would also apply. Maybe GST even.
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
Thanks Terry
I did have a Deed of Partition set up and stamped yes. Although there is a change of title going from 2 names to one name, I believed that the Deed of Partition would cover that although any change in that % ownership as per a new valuation would have a duty payable on that % change. The stamp duty office would make their own assessment of this I presume even if we submitted the Deed of Partition.
I had not considered CGT. The intention upon purchase of the block was that one party would own a property each. The original block has been held for over 12 months but has not been owner occupier so I believe the 50% capital gains tax would apply (30% on one of the entities which is a company). So the increased value of each property will be subject to CGT. We could not subdivide until the new house is built as this is a JV with monies tied together.
We had subdivision approval granted before we started building the new house. As land tax would be triggered by putting in the completion of the subdivision now I was going to wait until the house was further along and put in subdivision after 30 June (WA).
GST I believe might apply if the new house being built was to be sold. That is not the intention.
Is my thinking on track?
J12345
Change of title could result in stamp duty, CGT/Income tax and GST – even if there is no ‘sale’. But the deed of partition may save you against all of these. Did you get legal advice on the GST and GST aspects as well as the stamp duty?
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
No didn’t seek the advice on GST. Apart from accountants did confirm my intention to hold the property as selling may trigger GST on sale.
I took GST position from ATO website.
Regards
J1234Advice from accountant:
“If you have got a partition agreement for the title split, there is no CGT implication on the completion of the subdivision to 2 separate properties. The CGT only applies when you happen to sell the new property.”
Phew.
this suggests otherwise see from page 6
Advice from accountant:
“If you have got a partition agreement for the title split, there is no CGT implication on the completion of the subdivision to 2 separate properties. The CGT only applies when you happen to sell the new property.”
Phew.
Wow, that is a bold comment without seeing the documents. I don’t think it is that simple and I was going to refer you to the same document as crj above.
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
A great read. Thank you both for being so helpful. It’s a difficult area I appreciate.
J1234
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