Hi
I have a PPOR that I am looking to demolish, then sub divide the land into to separate blocks to build two separate units. (ie. unit 1 & 2)
My intention's are to live in one of those units permanently (ie. unit 1) and then just rent the other one out (ie. unit 2).
Then longer term my intentions are to sell them both. (eg. in 5 years time)
Is anyone able to provide my with the tax implications if I were to adopt this strategy.
In particular with regard to the sub division of the original property into two new titles. Would I be subject to any form of stamp duty on those new titles. In particular for unit 2 given that the intention is that this be an rental property and would be in my name as well as unit 2.
Also would unit 1 be subject to CGT in the future or would it be exempt given that its my PPOR. I would assume that unit 2 would be subject to CGT if sold later on down the track and I discount would apply given that I would have held the new property for over 12 months
Look forward to your reply
From my understanding, yeah your right, I think you would be up for stamps on both 1 and 2. And you would be right with exemption on 1 given its your PPOR and discounted over time on 2.
But perhaps someone with a little more Dev experience could shed some light. I'm keen to follow as personally the wife and I are considering this on our PPOR.
If you dont mind me asking, how big is your block? and what builder are you considering using?
I have seen MASSIVE variances in price and offers from builders here on the Gold Coast. Some offer free demolition with duplex packages. Some offer huge assistance getting council approvals and others nothing at all.
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Gidday the block that we are on is 820m2. I had a builder do a major reno on another house that we have about two years ago. As a result we ended up becoming really good friends. So I have been talking to him about doing it for me but he hasnt come back to me with the price as yet. I thought it best that I try and find out what I would be up for in terms of tax etc and then go from there. In terms of obtaining permits, town planners etc I shall be doing that all myself (ie. finding the right people to do it for met)
This is a very complex question and the answer will vary depending on a number of factors – you need to seek specialist advice. If you demolish a house you may lose the main residdence CGT exemption for starters. And because you are doing a development there may be a chance that this could be assessed as income. GST needs to be considered as well.
Generally only nominal stamp duty on the splitting of title if the names are the same before and after.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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