I need you advice to structure my loan, depending on how CGT is calculated.
My PPOR has just been subdivided. There is an existing house in the front. I will live in the existing house and new house will become an investment property. I wonder how the capital gain is calculated when the IP is sold. Should CG is calculated as follows:
Purchase price: $350,000
Subdivision cost: $40,000
-----------
Total acquired cost: $390,000
I got the appraisal letter from local estate agent stating that:
Existing house on front land (unit 1) : $400,000
Land at the back (unit 2): $250,000
The acquired cost allocated for each property:
Unit 1: 390K x 400K /(400K + 250K) = $240K
Unit 2: 390K x 250K /(400K + 250K) = $150K
Construction cost for unit 2 will be around $300,000
Total cost for unit 2: $150K + $300K = $450K
Selling price for unit 2 i.e $600K
Which one of these following method is correct for CG?
Method 1
selling price - acquired cost - construction cost
$600K - 450K = $150K
Method 2
(selling price - Land value at the time converted to IP - construction cost)
600K - 250K - 300K = $50K
If I nominate the existing house as IP and live in the new unit, how to calculated the CGT for existing house when it is sold? For example, selling price is $500K
Method 1
CG = (selling price - acquired cost)
=(500K - 250K) = $250K
or
Method 2
CG = (selling price - property value at the time converted to IP)
= 500K - 400K = $100K
My PPOR has just been subdivided. There is an existing house in the front. I will live in the existing house and new house will become an investment property. I wonder how the capital gain is calculated when the IP is sold. Should CG is calculated as follows:
Purchase price: $350,000
Subdivision cost: $40,000
-----------
Total acquired cost: $390,000
I got the appraisal letter from local estate agent stating that:
Existing house on front land (unit 1) : $400,000
Land at the back (unit 2): $250,000
The acquired cost allocated for each property:
Unit 1: 390K x 400K /(400K + 250K) = $240K
Unit 2: 390K x 250K /(400K + 250K) = $150K
Construction cost for unit 2 will be around $300,000
Total cost for unit 2: $150K + $300K = $450K
Selling price for unit 2 i.e $600K
Which one of these following method is correct for CG?
Method 1
selling price - acquired cost - construction cost
$600K - 450K = $150K
Method 2
(selling price - Land value at the time converted to IP - construction cost)
600K - 250K - 300K = $50K
If I nominate the existing house as IP and live in the new unit, how to calculated the CGT for existing house when it is sold? For example, selling price is $500K
Method 1
CG = (selling price - acquired cost)
=(500K - 250K) = $250K
or
Method 2
CG = (selling price - property value at the time converted to IP)
= 500K - 400K = $100K