Another question on CGT

[speedbump]

If anyone has any ideas on this.

We bought a block on the Sunshine Coast near the beach ( 1220sqm) for $745,000. We are moving the boundary(is already on council plans and wasn't known by previous owners, to make 2 blocks)for about $3,500.
1 x 700 with house, 1 x 520. The house will be worth about $650,000 and the block $350,000.

If we sold the house for $650,000(not living in it) and then built our house on the other to live in. What would CGT be ?

AIA

 

[DaleGG]

Hi

Congrats on the deal. That is always great to hear!
Did you know it was a possibility when you bought the property? Or, did you stumble across this?

Either way, well done.

The original purchase price; the stamp duty and other buying costs would be apportioned for each block to determine the amended cost base. The same applies to the costs of sub division.

The CGT will be hard to determine because you do not mention how long you have owned the block; the buying and selling costs nor your income levels.

At face value though, you could argue that the house was valued at 65% of the original purchase price. This means abt $485k plus a portion of the buying costs and the sub division costs.

The gain would then be about $165k (less costs above and less costs of selling) and tax would be paid on this net amount unless you have owned the property for 12 months or more in which case 1/2 again is tax free.

Dale

If anyone has any ideas on this.

We bought a block on the Sunshine Coast near the beach ( 1220sqm) for $745,000. We are moving the boundary(is already on council plans and wasn't known by previous owners, to make 2 blocks)for about $3,500.
1 x 700 with house, 1 x 520. The house will be worth about $650,000 and the block $350,000.

If we sold the house for $650,000(not living in it) and then built our house on the other to live in. What would CGT be ?

AIA

 

[speedbump]

Dale,
Thanks for the kudos !
I made an offer about $100K less than they wanted with DA approval and 4 month settlement !. I had to sell a few properties which I wasn't happy with. No-one else had made an offer after several months.

We will keep it for 12 months and will most likely move up there and live in it while we build next door. We have 3 other houses , one of which is 400 metres from the Gabba in East Brisbane. By the way this one suburb that is still relatively unknown and is gaining infrastructure not previously here.

Thanks

Mark

 

[DaleGG]

Hey Mark!

That is brilliant and well done!
Are you comfortable sharing your research and due dilligence with the forum so that we all may learn from your success?
It sounds like it is a great story with a fantastic ending.

Dale

Dale,
Thanks for the kudos !
I made an offer about $100K less than they wanted with DA approval and 4 month settlement !. I had to sell a few properties which I wasn't happy with. No-one else had made an offer after several months.

We will keep it for 12 months and will most likely move up there and live in it while we build next door. We have 3 other houses , one of which is 400 metres from the Gabba in East Brisbane. By the way this one suburb that is still relatively unknown and is gaining infrastructure not previously here.

Thanks

Mark

 

[speedbump]

Dale,
Im afraid it isn't much of a story in regard to due diligence or research as I tend to purchase on gut instinct and I don't believe in looking at 100 houses prior to buying as some suggest. I know a good deal when I see it. I do however restrict myself to areas that I have become familiar with. I have always bought near the beach or close to the city starting with Cabarita beach in 1980.

In short the house on the Sunshine coast was one I saw on the net and couldn't work out why it hadn't sold. My research was with the council and the agent who advised me that several people said it couldn't be done. Well about 3 hours of phone calls I discovered that it was already two blocks and just has to have the boundary moved so we made the offer. I reckon I made about $1000.00 per minute.

I am a police officer in Qld in the Forensic branch and I am at present having a year off. One thing I have learned this year is that you must look for the best deal "not just any deal". Everyone is surprised that there was the opportunity on the coast. I guess you just have to look.

Mark

 

[DaleGG]

Hi mark

Thank you. I have just given you kudos because your post is a great lesson to all of us and I thank you for sharing your knowledge and wisdom.

Have good un

Dale