CGT on land for PPOR

[JT87]

We currently have our PPOR in port Stephens leased out, may not be moving back here but hanging onto it at least while in the CGT free threshold.
I am now consider buying a block of land in Sydney from a new release.
Holding it for 2 years then building.
At what point would the land and eventually new home officially become our PPOR?
And when should I have the bank do a valuation on port Stephens or sell?
I would expect more growth from the block of land than the port Stephens property so would prefer this to be CGT free.

 

[Terry_w]

s 118-150 ITAA97

 

[Rob G.]

New block TD 2000/16

Regarding the old dwelling, you might have to get a valuation for the date it was first rented. The market value at this date might be deemed to be the cost base. Not enough information given.

ATO ID 2003/1112

 

[Paul@PFI]

We currently have our PPOR in port Stephens leased out, may not be moving back here but hanging onto it at least while in the CGT free threshold.
I am now consider buying a block of land in Sydney from a new release.
Holding it for 2 years then building.
At what point would the land and eventually new home officially become our PPOR?
And when should I have the bank do a valuation on port Stephens or sell?
I would expect more growth from the block of land than the port Stephens property so would prefer this to be CGT free.

First things first. In order to satisfy the main residence exemption you must build on the land and then occupy it. Only then can it satisfy any main residence tests.

You have numerous CGT issues that may affect each other :
- main residence exemption
- 6yr absence rule
- Valuation at date Port first earned income; and
- Proportioning
- CGT date/s and costs for the land and construction as separate CGT assets
- Date Sydney becomes main residence
- Land tax issues

Personal tax advice will be needed likely when facts and outcomes are known. You can choose which property is subject to CGT when there is overlap is SOME instances and in others you cannot. In the case of Port you may not satisfy the main residence exemption after X years as you will live in Sydney. Then you will have no choice. You cant just pick a property and deem that one is the exempt one...Most people choose the property that is sold first as the exempt one. At the time you consider sale of one of them is when you do the numbers and choose the least tax outcome that complies with relevant rules.