Hello, I have CGT related questions.
Firstly, my husband and I bought Property A in Nov 2016 and lived there as our main residence.
Then, we bought another property (Property B) with a bigger land in Oct 2019 (at $150,000) in the neighbourhood (2 minutes walk away) that was in a trash condition (collapsing ceiling, falling kitchen, etc.) and started renovating for a year or so. The plan was we move into Property B after renovation. The property A would have been worth $280,000 when we bought Property B in 2019.
Once we made the Property B livable in June 2020, we had our teenage boys move into Property B first while we were getting Property A ready for rent.
Then, the government announced the home builders grant in July 2020. To take advantage of that, we decided to build a house for us to live (as an owner builder) at the back of Property B as a built strata. We got council permit as an owner builder and the construction started in Dec 2020 at the back of Property B. (Land subdivision was not done as it was built strata not survey strata.)
While the construction at the back of the property B was still going on 2021, we decided to pursue survey strata rather than built strata for Property B. So while the construction at the back of property B is going on, we applied for subdivision and a new title for the back property.
Finally we were ready to move into the front house of Property B in August 2022 and the Property A was rented out in Dec 2022. The value of Property A would have been $380,000 at that time when it was rented out in Dec 2022.
In Dec 2022, the new house at the back of Property B became livable with power and water connected (though the construction was not completed). So we moved from the front house to the new house at the back while renting out the front house. At that time when the front house was rented out, the value of Property B as a whole (with only one title) would have been $350,000 plus new building cost of about $250,000.
Currently, the subdivision is not complete and we don't have a new title for the back lot either yet. I expect we will get the new title in a few weeks time if we expedite. Once the subdivision is completed, I expect the front house would be worth $300,000. And the new back property will be ($150,000 for land only and $450,000 for land/ building)
We live at the back and don' t have any plan to move at the moment. The front house will be a rental for a while if nothing changes. My question is this. When we sell the front house or the back house in the future, are we liable for the CGT? Which house do we consider as main residence at what period to save on CGT? Then what valuation do we need to get? How do we calculate CGT? Is there anything that we can do now to reduce the CGT liability? Is there any advice relevant to our situation?
Thanks advance.
ZJK
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