From: Pierre .
Hi All. I'll put this one to my accountant, but I thought I'd open up a new thread to discuss subdivisions and CGT.
I've just had an offer accepted on a property that was originally marketed as two properties. The property has an 1100m2 block with a 4x2 house on the top, and room for subdivision and another house on the bottom (block runs from one street all the way to the next). The vendors have a DA for subdivision, plans for a house to be built on the subdivided block, and a BA for the house to be built. All approvals are in place for the subdivision to go ahead, the forms are filled in, and all I need to do is submit the forms with the $8500 or so the council wants to get the subdivision finalised.
Now, rather than buying the properties separately or just one of them, I am buying the whole parcel on the condition that all paperwork relating to the subdivision is transferred to us on or before settlement. We will then decide if and when we wish to subdivide, and whether we will build the proposed house on the subdivided parcel before selling it off.
So, questions...
What effect does subdividing a parcel of land have on the value of the house / land left after subdivision?
Obviously the CGT event occurs on sale of the subdivided parcel, but how is the total gain calculated? Does the ATO require valuations of the two new parcels post-subdivision. If so, I would assume the sum of those new valuations would equal the total sale price for the purposes of calculating CGT payable.
For the finance brokers out there - will the bank be concerned about losing 460m2 of the 1100m2 of land in the original property I purchased, or will they only be concerned if the subdivision significantly reduces the value of the original parcel and property?
Any takers?
Any experience or advice? Please share.
Hi All. I'll put this one to my accountant, but I thought I'd open up a new thread to discuss subdivisions and CGT.
I've just had an offer accepted on a property that was originally marketed as two properties. The property has an 1100m2 block with a 4x2 house on the top, and room for subdivision and another house on the bottom (block runs from one street all the way to the next). The vendors have a DA for subdivision, plans for a house to be built on the subdivided block, and a BA for the house to be built. All approvals are in place for the subdivision to go ahead, the forms are filled in, and all I need to do is submit the forms with the $8500 or so the council wants to get the subdivision finalised.
Now, rather than buying the properties separately or just one of them, I am buying the whole parcel on the condition that all paperwork relating to the subdivision is transferred to us on or before settlement. We will then decide if and when we wish to subdivide, and whether we will build the proposed house on the subdivided parcel before selling it off.
So, questions...
What effect does subdividing a parcel of land have on the value of the house / land left after subdivision?
Obviously the CGT event occurs on sale of the subdivided parcel, but how is the total gain calculated? Does the ATO require valuations of the two new parcels post-subdivision. If so, I would assume the sum of those new valuations would equal the total sale price for the purposes of calculating CGT payable.
For the finance brokers out there - will the bank be concerned about losing 460m2 of the 1100m2 of land in the original property I purchased, or will they only be concerned if the subdivision significantly reduces the value of the original parcel and property?
Any takers?
Any experience or advice? Please share.
Last edited by a moderator: