Forums / Property Investing / General Property / Splitting ppr double block + selling + capital gains

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  • Profile photo of AnitavAnitav
    Participant
    @anitav
    Join Date: 2010
    Post Count: 3

    We have a double block with a house on one half. It is my partners ppr and he bought it 14 years ago. We are looking at realigning the block so we can sell the house as two 20×20 blocks and sell one with the house intact and the other an empty block. We have been told square blocks with a wide frontage are worth more and scarce. Rather than pulling the house down as it is straddling the two 10×40 blocks.

    My question is if we sell separately as I believe we will realise more, will he be up for capital gains tax. We live in lota Brisbane. He bought for $460k and I would hope to get 1,000,000 selling off separately with realignment costs of $70k.

    Many thanks for your time to reply to this as we are at loggerheads what to do.
    cheers Anita

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,110

    Yes you will be up for CGT or icnome tax and possibly GST.

    There are ways to minimise or eliminate these though so make sure you seek tax advice.

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

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

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Hi Terry,

    Are you happy to share an example how tax could be eliminated in such a scenario?

    I understand that one of the blocks will be considered PPOR (so no tax there) but the other surely will be considered IP so tax will be payable?

    Thanks,
    Ethan

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,110

    one way is to sell to a related entity just before sub division

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

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

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    one way is to sell to a related entity just before sub division

    Alright, but still… once the subdivision takes place, at least one of the lots is subject to CGT, right?

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Not if you sell it to a trust first. Main residence won’t apply to trust owned property.

    Another option is to sell first one after subdivison and then sell it after 3 months, CGT free potentially. The second one can then become main residence.

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

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

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Not if you sell it to a trust first. Main residence won’t apply to trust owned property.
    Another option is to sell first one after subdivison and then sell it after 3 months, CGT free potentially. The second one can then become main residence.

    Interesting ideas, thx! 👍😎

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

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