Hi All,
I am in the process of purchasing my first property and trying to determine the best way to structure things from a tax perspective. Can anyone please confirm if my plan below will work.
– Purchase a property with a unrenovated house at the front on a large block (600sqm)
– Make this house my PPOR for 6 months and renovate while living in property.
– While renovating also subdivide the block and immediatley sell block to my sister or g/f.
– Sister or g/f then build a house at the back as there PPOR.Once all is completed each home would have been lived in for above 6 months and can be sold as PPOR tax free. I am aware stamp duty will be payable when subdivided block is sold.
Anyone have any thoughts on the above?
Any help would be greatly appreciated.
Cheers,
Mav
unfortunately you’ll be liable for cgt & possibly gst on the ‘newly created parcel of land’.
All that glitters is not gold.
You could possibly avoid GST by purchasing it int he exact same percentages as the final ownership and use a deed of partition. So when it is divided you are not changing any ownership percentages.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Guys,
Thanks for your response.
Unfortunetly, I dont understand the reason why I would have to pay any cgt?
Lets say I lived in a home for 2 years with a large block and then decided I didnt need half of it. If i subdivided and sold I thought I would not need to pay any cgt for the period in which I owned that portion as part of my PPOR.
If I held the subdivided block and then built on it and used the proprty as an investment then the cgt would be calculated from that date or close to?
Can shed some more light on the above.
Cheers,
Mav
Mav
Rather than confuse you with technical reasoning you might want to have a look at an article on just such a strategy on Bantics website http://www.bantics.com.au "How not to be a Property Developer".
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Ok Richard.
Is there anyone that can please elaborate as to why the cgt would need to be payable?
You are creating a new block.
because you are making a capital gain bud?
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