All Topics / Value Adding / Selling subdivision to buy block of land

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of GiovanniGiovanni
    Participant
    @giovanni
    Join Date: 2004
    Post Count: 27
    October 22, 2006 - 5:30 am

    Hi to all,

    We live 9 kms away from Brisbane CBD, we’ve been living in our current house for 2 years and we got DA to subdivide into 2 blocks. Up to now, we were considering selling one block of land to finance construction on the remaining block, but we are being told will pay capital gains tax on this block.
    As a solution to this, we are currently considering selling to an investor, (thus avoiding capital gain tax) and buying a small block of land somewhere else. Is this the right investment decision to make?

    Thanks for your ideas & advice,

    Gio

    Profile photo of celesteceleste
    Participant
    @celeste
    Join Date: 2005
    Post Count: 169
    October 22, 2006 - 7:12 am

    Hi Gio

    How do you avoid CGT selling to an investor?

    Celeste

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781
    October 22, 2006 - 11:38 am

    Because he is selling undeveloped land subdivided from his PPOR.

    Should he build a home on it then it would be an IP and subject to CGT.

    The only loophole would be that he may be exempt for 6 months under the provision that you can own two PPORS whilst one is being sold. Not 100% sure and he should seek professional taxation advice.

    Simon Macks
    Residential and Commercial Finance Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of GiovanniGiovanni
    Participant
    @giovanni
    Join Date: 2004
    Post Count: 27
    October 23, 2006 - 7:57 pm

    Yes, Simon you are right when coming to selling undevelop land in one title which has been my PPOR thus avoiding CGT.

    “The only loophole would be that he may be exempt for 6 months under the provision that you can own two PPORS whilst one is being sold”

    This I don’t think so, because in order to subdivide, I need to demolish the house, and owning an empty block of land can not be claimed as PPOR.

    Thanks for your input!

    Gio

    Profile photo of elkamelkam
    Member
    @elkam
    Join Date: 2006
    Post Count: 722
    October 24, 2006 - 2:29 am

    Hello Giovanni

    Have you checked on that with a good accountant?

    Here is a link to the ATO site about treating vacant land as your PPOR under specific conditions.

    http://www.ato.gov.au/individuals/content.asp?doc=/content/36890.htm&pc=001/002/026/017/005&mnu=5060&mfp=001&st=&cy=1

    Hope this helps
    Elka

    Profile photo of GiovanniGiovanni
    Participant
    @giovanni
    Join Date: 2004
    Post Count: 27
    October 26, 2006 - 11:58 am

    Elka,

    Thanks so much for the information. ATO website is always a good source of samples and like you said a good accountant will be able to give me specific advice to my situation.

    Cheers,

    Gio

Viewing 6 posts - 1 through 6 (of 6 total)

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