Debt allocation after subdivision

[Madjack]

Hi

My first post after lurking as a guest for a long time

I have an 809 Sqm block in Brisbane that is on 2 405 Sqm lots. Currently it's my PPR.

My plan is to demolish the existing residence & build 2 new houses, one investment purposes & one for my new PPR

My existing debt is equal to the value of one of the 405sqm lots, say $300k. equity is therefore $300k which implies that I own the other lot own outright.

Assuming I build one house on one of the lots for investment purposes, for taxation purposes can I claim the build cost + 100% of the outstanding debt (300k)? I would expect total debt to be circa 90% LVR

Would the process be more straightforward if I got an separate loan solely for the investment property?

Cheers

 

[Terry_w]

No you cant. The current debt relates to the whole land and the house. You will have to apportion it, taking into account the house and the size of the blocks.

 

[Paul@PFI]

The original cost of the land must also be apportioned for income tax and a simple 50/50 may not be correct. If they are side by side maybe. Would value of land be same if front faces a road and rear has a river view ?? If one lot has a easement etc....

And you apportion the loan too...Maybe on same basis ? Maybe 50/50

Then apportion or directly allocate costs for the build to each site.
The one you keep is then non-deductible.
The one you keep - NO you don't claim the cost to build as a deduction. QS report will give deductions. The costs are part of the new CGT costs.