All Topics / Legal & Accounting / CGT on land ( my only property )

Viewing 16 posts - 1 through 16 (of 16 total)
  • Profile photo of JohnJohn
    Participant
    @john71
    Join Date: 2015
    Post Count: 7

    Hello,

    I know that CGT is applicable on vacant land when sold but is there any way that I can minimise it?

    I have never owned a home before but I have owned the land for 13 years. I wish to sell it and purchase my first home.

    Any other ideas to minimise or even eliminate CGT via smart accounting or any legal means?

    I don’t feel that its fair to fork out the money because it has been my only property and now I wish to buy a house.

    Thank you for any assistance,

    Regards.

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

    any expenses such as rates, insurance, interest, mowing etc that have not been claimed as tax deductible can be added to the cost base

    Profile photo of JohnJohn
    Participant
    @john71
    Join Date: 2015
    Post Count: 7

    Thanks crj,

    I thought as much… Damn you ATO!!

    I wish they wouldn’t consider it an investment, considering it is the only property I own. Oh well…

    Profile photo of DeanCollinsDeanCollins
    Participant
    @deancollins
    Join Date: 2015
    Post Count: 376

    can he build a house on it and then sell it tax free?

    how big is the land btw? eg I read in one of the forum posts that anything over 100 acres different rules apply.

    Profile photo of JohnJohn
    Participant
    @john71
    Join Date: 2015
    Post Count: 7

    Thanks for your input, Dean.

    The land is only 4.5 acres.
    I believe that of I were to put a dwelling on it, that it would be exempted. However, I don’t want to go through the whole building process, in the hope that I can recoupe the building costs, as well as the value of the land.it may well end up a waste of alot of time and money and essentially defeat the purpose.

    If figure, the buyer may want to build their ideal home on it, with tennis court,pool etc.it could also be used for a commercial purpose.
    I don’t want to limit its use, hence reducing the potential value.

    Thanks again.
    John

    Profile photo of crjcrj
    Participant
    @crj
    Join Date: 2004
    Post Count: 618
    Profile photo of JohnJohn
    Participant
    @john71
    Join Date: 2015
    Post Count: 7

    Hmm,no benefit there for me… However, I wonder if I can defer the CGT event and buy another piece of land (rolling over?) and build my primary residence on it, effectively avoiding the CGT altogether.

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

    No. Roll-over events in Australia would not cover that.

    Profile photo of JohnJohn
    Participant
    @john71
    Join Date: 2015
    Post Count: 7

    Damn it! Cant catch a break.

    Profile photo of DeanCollinsDeanCollins
    Participant
    @deancollins
    Join Date: 2015
    Post Count: 376

    Link to roll-overs for people who want to read up, was interesting to see a crown lease and mining rights exchange…..would have been covered.
    https://www.ato.gov.au/General/capital-gains-tax/cgt-exemptions,-rollovers-and-concessions/rollovers/

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Don’t forget the 50% CGT discount

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of JohnJohn
    Participant
    @john71
    Join Date: 2015
    Post Count: 7

    100% discount is better. ;)

    Profile photo of aussieguy2000aussieguy2000
    Participant
    @aussieguy2000
    Join Date: 2010
    Post Count: 81

    Are there any “portable” homes in the area people want to dispose of (ie give away – most give them away but you have to pay for transport), depending on your CGT liability, if someone was to dump an old house on the land, check what services you have to have connected (living without grid connected electricity isnt illegal is it?), move into it and sell the block… you may get lucky and find someone who will take it with the house, otherwise you may have to pay to have it dismantled and disposed of… if you CGT liability is 50k it wouldnt be worth it as that stuff isnt exacly cheap even for one of those houses, if it was 500k this strategy would save you the cost of a house (literally!)… obviously you would have to do enough to “prove” to the ATO that you actually lived in it if they came snooping… just an idea though.

    • This reply was modified 4 years, 8 months ago by Profile photo of aussieguy2000 aussieguy2000.
    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Are there any “portable” homes in the area people want to dispose of (ie give away – most give them away but you have to pay for transport), depending on your CGT liability, if someone was to dump an old house on the land, check what services you have to have connected (living without grid connected electricity isnt illegal is it?), move into it and sell the block… you may get lucky and find someone who will take it with the house, otherwise you may have to pay to have it dismantled and disposed of… if you CGT liability is 50k it wouldnt be worth it as that stuff isnt exacly cheap even for one of those houses, if it was 500k this strategy would save you the cost of a house (literally!)… obviously you would have to do enough to “prove” to the ATO that you actually lived in it if they came snooping… just an idea though.

    But this would not backdate the exemption to the date of purchase, but from now onwards. Would also need an occupation certificate to be considered a residence – probably.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of JohnJohn
    Participant
    @john71
    Join Date: 2015
    Post Count: 7

    Called the ATO today…

    Spoke to a fellow who initially gave me some hope. He thought that I may be exempted because I had not bought a home in the meantime, and particularly because I am considering purchasing another vacant block to replace it.

    He put me on hold to check some scripts and to speak to his superior. Apparently he tried to sell his theory to the higher ranked bloke, only to get “put in his place”, were his words.

    In short… No Dice!!

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

    Link to roll-overs for people who want to read up, was interesting to see a crown lease and mining rights exchange…..would have been covered.– https://www.ato.gov.au/General/capital-gains-tax/cgt-exemptions,-rollovers-and-concessions/rollovers/

    I hope the Obeid family was able to be advised about this.

Viewing 16 posts - 1 through 16 (of 16 total)

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