Built Strata or Survey Strata

[wrexter]

Hi All,

We aquired a Duplex property in August 2014 with a potential for a 3rd freestanding dwelling in the battleaxe.

We have commenced with preliminary design and are looking to go ahead with survey etc.

We have been advised that we should check with our accountant if it is better to go:

- Survey Strata (Subdivide first, then Build)
- Built Strata (Build then subdivide)

I thought i would ask you good people first.

I want to know if there are any tax issues concerned with each one ( or any other issued)

We would prefer to go Built Strata as it means we can get it completed quicker and the build/subdivision costs can be rolled into one loan.

Thanks

 

[thatbum]

What's your end goal?

 

[wrexter]

Retain all 3

 

[Paul@PFI]

For tax purposes there is no real issue whatsoever with this decision. Subdivision isn't a CGT event. It more an apportioning event. It impacts CGT or tax later.

I am assuming your decision is to keep. In which case we are talking CGT costs. If not and you propose to sell then we would be talking revenue account and a complex issue with trading stock apportioning and value choices. However same issue applies. This question is about apportioning.

Changing the land from two to three dwellings would merely alter the cost base. The original 2 site cost base must be apportioned. Build costs dev costs etc all impact.

So when you are finished you will have three dwellings EACH with a different cost base. You cannot load one up etc.

Loan interest deduction issues may pose a complex concern....Some might be deferred as a tax deduction !! Some costs will also be CGT costs.

Good personal tax advice is a must to avoid really large mistakes.