Hi all, how is cgt calculated when you have owned the vacant land (investment) for two plus years, then build and sell on completion.
Is cgt calculated from the date of land purchase or does the construction affect timing for cgt purposes?
Thanks in advance
cheers
brahms
If you don’t ask, the answer is no!!
brahms,
I assume you are referring to qualifying for the 50% CGT discount and the 12 month wait.
A fixture to land becomes part of the land so at common law the acquisition date for the house would be the date the land was acquired. Section 108-55 of the CGT legislation has some exclusions to the common law principle but they would not apply in your case. They only apply to pre CGT land or depreciable assets under section 40 (not section 43 which is regarding special building write off) and assets for research and development.
In short this means only assets that are separate from the land would have the later acquisition date and these would only be your plant and equipment such as carpets curtains hot water system etc not the actual building.So, when does the 12 mths start? When you buy the land or when you move into the house?
Phil,
It starts when you buy the land.
Have just completed such a project and the accountant confirmed its the land purchase contract date that determines the CGT trigger date.Julia: you must be a walking ATO dictionary !!!
Amazing……KP
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