The Corner block of land next door to my PPoR has come up for sale.
Currently my block is slightly too small to subdivide but if I purchase next door I could subdivide a good size block across the rear of both properties resulting in 2 houses plus a vacant lot.
Currently I am putting together a feasibility to work out if there is any profit potential however I have run into a bit of a hurdle in relation to the tax implications.
On completion of the subdivision I would like to sell at least 1 of the 3 properties, which property I sell will most likely depend on the tax implications.
Based on this and the information below; I would like to know:
1. Are the Options listed below going to be considered a business income, therefore subject to GST and no CGT discount?
(I expect this is the case as I am purchasing next door in order to subdivide, although option 2 may be taken as upgrading to a new house)
2. Does anyone have an opinion of what option would be subject to the least tax?
3. Can anyone recommend a good Accountant to help me out in Fremantle/Perth?
House 1:
•PPoR (purchased using first home owners benefits)
•Purchased Nov 2011
•Purchase Price: $445,000 (approximately land value at the time, house had little to no value)
•Stamp duty and legal costs: $0 stamp duty, $5000 other costs
•Estimated Value now: $570,000 ($30,000 in reno’s)
House 2:
•House next door on corner block
•Purchase Price: $670,000 ($580,000 land, $90,000 Structure)
•Stamp duty and legal costs: $32,000
Subdivision:
•Subdivision costs $80,000
•30% of each of the current properties used to create new block.
•Vacant Block value: $480,000
Estimated Sale Values:
•House 1: $530,000
•House 2: $620,000
•Vacant Lot: $480,000
•New Lot with $300K House: $900,000 (2 years after purchase of House 2)
Option 1: Subdivide and sell vacant block. (do I pay CGT or GST?)
Option 2: Subdivide, Sell House 1, Build and make vacant lot new PPoR, Retain house 2 as rental.
(Is this new PPoR subject to CGT or GST if I sell in the future?)
Option 3: Sell all but one property. (What one is best to keep?)
Currently my block is slightly too small to subdivide but if I purchase next door I could subdivide a good size block across the rear of both properties resulting in 2 houses plus a vacant lot.
Currently I am putting together a feasibility to work out if there is any profit potential however I have run into a bit of a hurdle in relation to the tax implications.
On completion of the subdivision I would like to sell at least 1 of the 3 properties, which property I sell will most likely depend on the tax implications.
Based on this and the information below; I would like to know:
1. Are the Options listed below going to be considered a business income, therefore subject to GST and no CGT discount?
(I expect this is the case as I am purchasing next door in order to subdivide, although option 2 may be taken as upgrading to a new house)
2. Does anyone have an opinion of what option would be subject to the least tax?
3. Can anyone recommend a good Accountant to help me out in Fremantle/Perth?
House 1:
•PPoR (purchased using first home owners benefits)
•Purchased Nov 2011
•Purchase Price: $445,000 (approximately land value at the time, house had little to no value)
•Stamp duty and legal costs: $0 stamp duty, $5000 other costs
•Estimated Value now: $570,000 ($30,000 in reno’s)
House 2:
•House next door on corner block
•Purchase Price: $670,000 ($580,000 land, $90,000 Structure)
•Stamp duty and legal costs: $32,000
Subdivision:
•Subdivision costs $80,000
•30% of each of the current properties used to create new block.
•Vacant Block value: $480,000
Estimated Sale Values:
•House 1: $530,000
•House 2: $620,000
•Vacant Lot: $480,000
•New Lot with $300K House: $900,000 (2 years after purchase of House 2)
Option 1: Subdivide and sell vacant block. (do I pay CGT or GST?)
Option 2: Subdivide, Sell House 1, Build and make vacant lot new PPoR, Retain house 2 as rental.
(Is this new PPoR subject to CGT or GST if I sell in the future?)
Option 3: Sell all but one property. (What one is best to keep?)