Hi All,
I’ve got a few different answers to this question so putting it to you guys.
If you purchase land and build a dwelling and then sell for a profit once completed – when does the 12 months (for 50% CGT discount) start? It is from the Contract / Settlement date on the land, or when Construction is finished / the house is rented?
Cheers,
Matt.
Matt McLean | Rams Home Loans
Email Mecontract date for the land generally.
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. Does the ATO scrutinise your ‘intention’ closely? I’ve been told if your intention is to build and sell for a profit then the 50% discount may not be applicable. If you build with the intention of renting but change your mind as soon as its completed and sign a contract to sell (more than 12 months after signing the land contract) you will remain eligible for the discount?
Matt McLean | Rams Home Loans
Email MeYes. But not just intention, but the events themselves. So if you intended to buy land construct and sell then this would probably not be taxed as a capital gain, but income. If you can demonstrate you intended to hold, and took steps too, but circumstances changed, then it might be taxed as a capital gain.
Don’t forget GST too.
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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