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Kurudui(Newbie)Newbie
27 Apr 2024

Hi,

I have been approached by a telecommunications ground lease acquisition company to purchase a long term lease. I have a cell tower on my property and a long term lease with the owner of the tower.

How will the lump sum payment for the lease buyout be treated for income tax purposes.

As I see it, they are basically paying me many years of lease payments in one lump sum. Is it just considered ordinary income as per my normal annual lease payments.

Are there any Capital Gains Tax implications for me?


thanks.

Dot.

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Most helpful reply

Taxduck(Taxicorn)Taxicorn
27 Apr 2024

I would suggest that the annual income you currently receive is regarded as rental income. You have a lease agreement with the owner of the tower to rent that part of your land (for x dollars a year) that has the tower on it. You are considering selling the lease to a third party, so they will collect future rent. The sale of the lease would be a capital gains event (so not normal income). See link on sale of leases and CGT

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/cgt-events

This means that you would be eligible for the 50% discount on the gain (if you have held the lease for at least 12 months)

Note that my opinion is not professional tax advice.


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Most helpful reply

Taxduck(Taxicorn)Taxicorn
27 Apr 2024

I would suggest that the annual income you currently receive is regarded as rental income. You have a lease agreement with the owner of the tower to rent that part of your land (for x dollars a year) that has the tower on it. You are considering selling the lease to a third party, so they will collect future rent. The sale of the lease would be a capital gains event (so not normal income). See link on sale of leases and CGT

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/cgt-events

This means that you would be eligible for the 50% discount on the gain (if you have held the lease for at least 12 months)

Note that my opinion is not professional tax advice.


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Hi, I have a 20 year communications ground lease on my property. A ground lease acquisition company | ATO Community