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KiamaCourage(Newbie)Newbie
3 June 2022

My husband and I have owned an investment property for 6 years. There is a house at the rear of the property. We have started to build a house on the front of the block and will do a dual occupancy subdivision and sell the new build and keep the old one.


I have two questions: Are we eligible for the 50% capital gains tax exemption because we have had the entire property for more than 12 months?

This is not a business but we have previously sold a block of land which we subdivided off a house. Do we need to pay gst?

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Bruce4Tax(Taxicorn)Taxicorn
4 June 2022

This is a profit-making scheme, so profit on the new unit to be sold will be taxed as ordinary income - and GST will apply to the sale because it is new residential property.


The CGT exemption applies to any deemed capital gain arising from the deemed disposal of the land - deemed to be re-acquired at market value as an input to the profit-making scheme.


Developing new residential property is different to selling off excess land.


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Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
4 June 2022

This is a profit-making scheme, so profit on the new unit to be sold will be taxed as ordinary income - and GST will apply to the sale because it is new residential property.


The CGT exemption applies to any deemed capital gain arising from the deemed disposal of the land - deemed to be re-acquired at market value as an input to the profit-making scheme.


Developing new residential property is different to selling off excess land.


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