Tax Implication In Subdividing a Residential Block

Hi all,

I have been living in my current house for more than 2 years. After talking to a local town planner recently, I found out that I can build an extra dwelling on the block.

Can anyone please let me know what is the tax implication of selling the new dwelling in the following situations:

1. Build first, subdivide to strata title while building and rent it out while building

Is it true that when I sell it, the capital gain would be sale price minus building costs?

To avoild this huge capital gain for the new dwelling, I could:

2. Build first, subdivide to strata title while building then move in to the new house when complete.

Hence will I be excempted from the capital gain when I sell the new dwelling if I sell it say a year later?

I'm not sure which approach I should take to achieve the most tax effective outcome.

Thanks,
Talismans