Capital Gains on Dev. properties?

[elwyn.d]

Just a quick question for someone to please answer. If I purchase a block of land and then build and sell the units is there capital gains paid or is it treated as income for tax porposes.
Thank.........Elwyn.d

 

[DaleGG]

Hi Elwyn

A lot will depend upon the circumstances, but, concievably both are possible.

If you have a business of development, the income will be taxed as ordinary income in most cases. However, if you do this as a once off, it is more than likely taxed as CGT.

Again though, bith can apply.

Dale

Originally posted by elwyn.d
Just a quick question for someone to please answer. If I purchase a block of land and then build and sell the units is there capital gains paid or is it treated as income for tax porposes.
Thank.........Elwyn.d

 

[Homer J Simpson]

Dale,

If it is a "hobby", what are the tax implications if the development was over a year or under a year?

 

[DaleGG]

Hi HJS

I am a big fan of your work, but, the kids are an even bigger fan. I have a question about marge's blue hair off forum one day . . .

The more I think about it, the more I am inclined to think that the tax office will treat the profit as income and not a gain as the activities would more than likely have been conducted in a business like manner with a view to making a profit.

I gather you are talking about the 50% exemption with CGT if the property was owned for more than 12 months. Yes, I cannot see why this would not apply if the income was treated in this manner.

Dale

Originally posted by Homer J Simpson
Dale,

If it is a "hobby", what are the tax implications if the development was over a year or under a year?