All Topics / General Property / capital gains tax

Viewing 10 posts - 1 through 10 (of 10 total)
  • Profile photo of Tracy LeeTracy Lee
    Member
    @tracy-lee
    Join Date: 2006
    Post Count: 19

    Hi, can any one tell me if you build on a block of land do you have to wait the 12mths from buying the land or from the completion of the house to save on the capital gains tax.

    Profile photo of blogsblogs
    Participant
    @blogs
    Join Date: 2005
    Post Count: 418

    Not sure what you are asking? CGT is generated from when you sell….

    Profile photo of Tracy LeeTracy Lee
    Member
    @tracy-lee
    Join Date: 2006
    Post Count: 19

    If you sell a property before 12mths you pay 50% more in capital gains tax. But I’m not sure if the 12mths starts from the time of purchase of the block or when you have finnished building the house on it.

    Profile photo of kum yin laukum yin lau
    Member
    @kum-yin-lau
    Join Date: 2006
    Post Count: 342

    Hi, I was told it’s from building which probably means completion.
    I’m not totally sure about this but my accountant had been murmuring about it.

    Raises some issues:
    1) what do you do in the intervening months? Rent?
    2) GST will still apply. In which case, why not wait out the 5 years & not have to pay GST?

    Will surely appreciate it if anyone could add some more opinions/facts/ideas.

    Good luck,
    Kum Yin

    Profile photo of trajiktrajik
    Member
    @trajik
    Join Date: 2005
    Post Count: 102

    It’s 12 months from land purchase contract date to sale contract date.

    Not sure what you’re are talking about with GST, as GST is only applicable if you’re carrying on an enterprise, and also what is the 5 year period to not pay GST?

    [email protected]
    http://www.guardianaccounting.com

    Profile photo of crjcrj
    Participant
    @crj
    Join Date: 2004
    Post Count: 618

    Or does the ATO treat it as two assets:

    a. the land

    b. the new house

    if so there would be two different dates

    Profile photo of GreenfieldGreenfield
    Member
    @greenfield
    Join Date: 2006
    Post Count: 5

    http://www.ato.gov.au/individuals/content.asp?doc=/content/36878.htm&pc=001/002/026/016/003&mnu=5060&mfp=001&st=&cy=1

    Quote: If a dwelling was not your main residence for the whole time you owned it, some special rules may entitle you to a full exemption or extend the part exemption you would otherwise get. These rules can apply to land or a dwelling if::::
    you are yet to live in the dwelling but will do so as soon as practicable after it is constructed, repaired or renovated and you will continue to live in it for at least three months”

    The way I understand it you are fully exempt if it is your own dwelling and live in it for a minimum of 3 months after construction, that look correct?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    CGT is calculated from the contract dates as Trajik points out.

    If you sell a property before 12mths you pay 50% more in capital gains tax. This is only applicable if you purchase the property in your personal names. Purchase it is Super and the rate is 15% before 1 year and 10% thereafter.

    Cheers

    Richard Taylor
    Residential & Commercial Finance Broker.
    Licensed Financial Planner. Ph: 07 3720 1888
    [email protected]
    Looking for life cover – We Guarantee to beat any quote you have in writing.

    Richard Taylor | Australia's leading private lender

    Profile photo of crashycrashy
    Participant
    @crashy
    Join Date: 2003
    Post Count: 736

    ummm

    splitting hairs here, but…….50% more?

    I think you mean tax on the other 50%……big difference

    http://www.posigear.8k.com
    Positive Geared Share Investing

    Profile photo of AUSPROPAUSPROP
    Participant
    @ausprop
    Join Date: 2003
    Post Count: 953

    if you have built a spec hoime with the intention of just building and selling for a profit, then you are conducting an enterprise. As such you will need to register for GST and remit accordingly. As you are conducting an enterprise, CGT does not apply, however the net profit will need to be included in your normal assessable income.

    if you are more of a property investor i.e. your business is renting properties out, you could argue that you are just realising one such property. hence the you would need, to be extra safe, 367 clear days from the date you signed the contract to purchase the land till the date you signed the contract to sell the land (regardless as to what is sitting on the piece of dirt at that time) to be eligible for a CGT reduction. then you will just need to argue your case – should the need arise – that you are indeed a property investor not a trader.

Viewing 10 posts - 1 through 10 (of 10 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.