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  • Profile photo of oO Dreamer OooO Dreamer Oo
    Member
    @oo-dreamer-oo
    Join Date: 2003
    Post Count: 24

    Hi
    I recently purchased a property in Alice Springs. It is zoned R2 which allows for unit development.
    The house is currently my principal place of residence. The size of the land is approx 1000sqm, well enough to build another house next to it. My plan is to build the house and rent both houses out when the construction completes which will make them good +ve cashflows IP.
    I like to know what is the tax implication.
    Looking forward to your reply. Thanks.
    Regards,
    Liviwell

    Profile photo of oO Dreamer OooO Dreamer Oo
    Member
    @oo-dreamer-oo
    Join Date: 2003
    Post Count: 24

    Is subdivision uncommon?
    To me it’s like getting a piece of land for free. Has any one considered that alternative?
    Please share some of your experiences.
    Cheers.
    Liviwell

    Profile photo of xyzzyxyzzy
    Participant
    @xyzzy
    Join Date: 2003
    Post Count: 178

    Take care with capital gains tax as your ppor is exempt.

    Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225

    A unit site eh ?

    I don’t Know Alice but it would be worthwhile to go to council and find out what exactly you could build on such a size block.

    Spend $ 12 or so and buy the council’s unit code (which tells you about their rules).

    In any event the townplanner would probably be able to tell you off the top of his head how many units can be built on a 1,000 sq. metre block as no doubt he has seen applications involving similar size blocks.

    Your property may be worth more as a development site than as a house.

    Secondly, you will get better value by buying an existing house than building a new one (in the event you manage to sell the property as a development site)!!!

    To get the most profit from selling a development site it would be best to sell it with council approval attached.

    This means that YOU will need to spend money on a surveyor and building plans, council application fees etc.

    Cheers,

    Pisces133

    Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225

    Oh, I forget to address the issue of tax.

    I am not an accountant but I would imagine that
    you would need to step carefully as I can just imagine that Mr Tax could well hold to the view that, from the time when you had the plans prepared, you acted in the capacity of a developer. I just don’t know what the situation would be.

    I suggest you phone the taxation department and ask the question and thence get your accountant to get a ruling on the issue if necessary.

    If there is a problem (in that you may be liable for some tax) you would need to do some clever
    thinking to find a solution for your problem.

    Cheers,

    Pisces133

    Profile photo of oO Dreamer OooO Dreamer Oo
    Member
    @oo-dreamer-oo
    Join Date: 2003
    Post Count: 24

    I have spoke to the land & infrastructure today and understood what’s involve in subdividing and obtaining the permits.
    What I like to confirm is, will the newly developed home be subject to Capital Gains Tax and the existing property retains it’s CGT exemption as it has been my principal place of resident?
    Please help[:I]

    Profile photo of davidfemiadavidfemia
    Member
    @davidfemia
    Join Date: 2003
    Post Count: 89

    liviwell,

    The CGT legislation can be quite complicated. Essentially your ppor will remain exempt. The taxes that apply to the new property will depend on your choice to sell or retain.Should you sell, the cgt will be applicable. The cgt event will commence from the time the slab is layed.

    You will not be treated as a developer, as presumably its a one off, you are not registered for GST, and the project will be in your name as an individual.

    Have you considered strata? This may be a cheaper and quicker solution.

    David Femia
    http://www.femiapropertygroup.com.au

    Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    You say you will rent both properties out once completed, it’s my beleif that tax considerations would only come in when you sell either properties.

    Presumably as these properties are both now rented out you will have somwhere else as your PPOR ?

    Am i wrong in this ??

    REDWING

    “The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”

    Profile photo of shaunwalkershaunwalker
    Member
    @shaunwalker
    Join Date: 2003
    Post Count: 403

    if you sell the block of land/and or house you will be done for capital gains tax on them.
    as the new block of land is a seperate entity than your PPOR you will be taxed as if you have just bought an investment property and sold it.
    just remember to hold for 12months and 1 day and you should only be done for 50% of the capital gains on your new IP at market value. (this means you cant sell it for a dollar to your family)

    Profile photo of oO Dreamer OooO Dreamer Oo
    Member
    @oo-dreamer-oo
    Join Date: 2003
    Post Count: 24

    quote:


    liviwell,

    The CGT legislation can be quite complicated. Essentially your ppor will remain exempt. The taxes that apply to the new property will depend on your choice to sell or retain.Should you sell, the cgt will be applicable. The cgt event will commence from the time the slab is layed.

    You will not be treated as a developer, as presumably its a one off, you are not registered for GST, and the project will be in your name as an individual.

    Have you considered strata? This may be a cheaper and quicker solution.

    David Femia
    http://www.femiapropertygroup.com.au


    Hi David
    Could you please tell me how would strata be the cheaper and quicker solution. Thanks for taking time to answer my question, greatly appreciated.
    Kindest Regards,
    Liviwell

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