Capital Gains Tax for OTP Purchase

[alik2806]

We signed contracts for an Off The Plan unit in Broadbeach in April 2006 and expected settlement is late 2010. Will the holding date for CGT (ie 50% discount applies after property is held for one year) apply from date of exchange of contracts or date of settlement?

 

[Pat]

Contract date

 

[yo yo ma]

Just to add to what Pat has said, the ATO state on p25 of the Guide to CGT 2007 (2.39MB):

"if you owned the property for at least 12 months (even if you did not construct the new building or improvements more than 12 months before the CGT event happened) you can use the discount method to work out your capital gain from the property."
Steve

 

[Ausprop]

when does this passive CGT style investment become trading revenue? after you have done one flip perhaps?

 

[Pat]

Hi Ausprop,

When you get up to three the next one should definitely be revenue. I believe the ATO would try to knock out Number three but this would be an arguable position.