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Taxduck(Taxicorn)Taxicorn
20 June 2024

Well, this is a complicated undertaking. How you go about it all is not for me to say. Can only discuss the tax implications.

Most straightforward from a tax point of view is one party purchases in their name, building demolished, subdivide, then transfer new block to the other party. Then only one party has to deal with the CGT as well as state taxes such as stamp duty.

Market value of subdivided block as at transfer date less 50% purchase price = gain (or loss). That is assuming blocks are same size. (50% of all costs to subdivide included in cost base)

Important thing is to keep record of all costs, including demolition of building.

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tax_smart(Initiate)Initiate
20 June 2024

@Taxduck thanks - so working with some hypothetical real numbers here.


Partner A purchased old dwelling with land for $2M and paid stamp duty etc of around 100k.


Partner A does all the planning etc and subdivides property into 50% portionable land size. Partner A transfers subdivided block (50%) to Partner B for the valuated amount at that time, approx $1M. It could actually be a lot less because it could be a south facing portion of the lot and now valued at less than the other side so not a 50/50 assumed valuation. Maybe now its worth only $850k. So there is a capital loss for Partner B in acquiring the subdivided land


Partner B has to pay stamp duty on the $1M purchase (or 850k whatever it may be)


Partner A and Partner B can enter into contract with builder to build duplex home.


Partner A and Partner B treat each side as PPOR and if held for greater than 12 months are not subject to any CGT if sold at a later time.


Have i missed anything?

Taxduck(Taxicorn)Taxicorn
20 June 2024

@tax_smart

Sorry. Just realised you want to build a duplex. May mean you can't subdivide land before building as a duplex is one building separated into 2 homes.

If that is the case then earlier post is not relevant.

Once you get into building new residential premises then disposing of them it gets into the murky waters of property development. I steer clear of that.

Don't know what your best course of action would be. Probably seek out a tax professional experienced in property matters.

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