All Topics / Legal & Accounting / A question on Tax Liabilities

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  • Profile photo of belly113belly113
    Participant
    @belly113
    Join Date: 2016
    Post Count: 2

    Hi everyone. This is my first post so hope someone can answer my question. My wife and I own a 2 acre residential block that is too big for us now. We have a planning permit to subdivide to 5 blocks. Our home of 12 years is sitting in Lot 2. We have a developer wanting to purchase Lot 1,3,4 and 5. He will do the complete development and we will keep our home on Lot 2 and when titles are struck will settle with us for X dollars less the 10% deposit paid.

    Firstly can anyone see any problems with this as far as just the logistics of this deal and secondly we have had conflicting reports about whether or CGT is applicable to this scenario.

    We see it as realizing an asset but others say CGT is applicable.

    I will thank you all in advance for any info that may help us.

    Profile photo of Tony BurnettTony Burnett
    Participant
    @tonyburnett
    Join Date: 2016
    Post Count: 17

    I would sit down and write into the tax office for a ruling if CGT apply, then you have it in writing and can be sure, it will take around 28 days, and the forms are on the ato site somewhere. Make sure you give them the full details.

    Its as simple as that, or you can rely on more “opinions”

    If you can read and write then rulings are not that hard to do and are free if you do them yourself.

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

    I can see many legal and tax issues to consider. The developer will be developing land he doesn’t own. Does this mean you will be giving your land as security?

    As Tony says you may lose the main residence exemption and the CGT exemption because you are now possibly in the business of developing the property. CGT may not apply in this situation but normal tax rates may.

    You need to get some detailed advice.

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

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of belly113belly113
    Participant
    @belly113
    Join Date: 2016
    Post Count: 2

    Thanks to both Tony and Terryw. Looks like i will definitely have to get some professional advice as to whether to move forward with this deal.

    Cheers

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