one house but two lots; CGT?

[sundirtwater]

Hi guys,
I have an old knockdown house over two lots that I just purchased and now live in as my PPOR. Sometime soon I would like to either knockdown and sell the vacant land or build two new houses. I'm seeking anyone's comments on the following tax issues:

1. If I remove the house and sell both lots seperately would there be any CGT payable since I was living equally on both lots (the bedrooms are on one lot and the bathrooms on the other!)?

2. If I build two houses and sell straightaway would I be up for CGT on one or both?

3. If I build one house, live in it for a while and then sell would there be CGT payable?

4. If I build both houses, live in each one (say 6 months each) and then sell would there be CGT?

Would appreciate any comments...

 

[jrc]

1. To get the pPOR CGT exemption you need to sell the house and both lots in one transaction to on buying entity.
2. You may be classed as a developer
3. See answer to 1
4. You may be able to do this - build one house, live in it as PPOR (I think for new houses), build the second house and sell the first. You may be able to overlap having 2 PPORs for 6 months.

 

[jonmardell]

you could sell the property to your own company to do the development which means it will be cgt free

 

[.toe]

'Slide' the house to the front or rear, keep it for now and live in it/renovate if you have to (cheaper anyway). Subdivide the rest and build or sell, pay CGT on that only. When/if you sell the original house, it's your PPOR so no CGT. If you tanant the original house maybe you'll benefit from the six year rule.

Perhaps an accountant here can confirm these ideas?

 

[sundirtwater]

2. You may be classed as a developer
3

Thanks for the comments.
So for example if we were only talking about one lot with one old house that is your PPOR and you knock it down to replace with a new one - is that considered development by the ATO? If so is the reason being that you physically have to leave the premises and go live elsewhere whilst building? If you don't physically move and live in a shack at the rear is it different?

If that scenario does exempt you from CGT what about building both houses simultaneously and physically living in both of them at the same time (after all they are right next to each other and they will be small houses as the lots are small so its not unreasonable)? After some time I would sell them both off (to different people) but since both were simultaneously my PPOR do you think the ATO would see me as CGT exempt from both?

 

[Ms Jade]

you could sell the property to your own company to do the development which means it will be cgt free

But wouldn't the company then be up for 30% tax + GST?

 

[eggnog]

and also a second serving of stamp duty.