Subdivision and CG tax

Hi, I'm asking this on behalf of a lady who I meet when we take our dogs to the park.

She has a 800m2 block with her PPOR on it. If she subdivides into 2 blocks each on their own title, demolishes the PPOR, builds 2 houses one on each title, sells one and lives in the other as her new PPOR, at what point is she liable for CG tax and on which property?

Thanks for any advice

JB
 
Very complex.
Splitting land and demolishing house / constructing house.

CGT may not apply depending on the circumstances - could be income perhaps.
If CGT does apply it will only arise on the sale or one or both properties.
 
Demolishing the house means she loses her PPOR CGT exemption, because your PPOR can't be a vacant block of land, and it would at some stage in the plan described.

Cost base can be apportioned between the two new titles, and then CGT, if it applies (rather than income tax) would be liable when the new titles sell.

If there is already a large capital gain on it, it is worth looking into whether she is better off selling it CGT-free at market value into a new entity. The new entity is liable for stamp duty, but this may be less than the CGT saved, depending on how long the property has been held.
 
If there is already a large capital gain on it, it is worth looking into whether she is better off selling it CGT-free at market value into a new entity. The new entity is liable for stamp duty, but this may be less than the CGT saved, depending on how long the property has been held.

Why wouldn't there be CGT payable in this scenario?
 
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