Subdivision/CGT scenario

I believe this has been answered at some stage in the most recently 'old' forum (as opposed to the old one before the last one;) ) but what is the CGT situation in these cases:

1) Own home, chop chunk of land off, sell. CGT apply or not?

2) IP, chop chunk of land off after 12months, sell. This obviously has CGT implications, but at what point is the new block deemed to be in your possession (and hence qualify for the 50% CGT discount)?

Thanks in advance.
 
Hiya

Originally posted by Apocalypse
I believe this has been answered at some stage in the most recently 'old' forum (as opposed to the old one before the last one;) ) but what is the CGT situation in these cases:

1) Own home, chop chunk of land off, sell. CGT apply or not?

2) IP, chop chunk of land off after 12months, sell. This obviously has CGT implications, but at what point is the new block deemed to be in your possession (and hence qualify for the 50% CGT discount)?

Thanks in advance.
The first issue is whether the land was bought pre CGT, or after. That is, was the land bought before 19th September 1985? If so, then the sale is exemp from CGT.

If it was bought after, then it is subject to CGT.

It is important to obtain a valuation of the "chunk" at the time of sub division compared to the value of the whole block as this will give you an indication of the percentage of the original cost that applies to the land.

The cost of the "chunk" of land for CGT purposes will be deemed to be an estimate of the value of the "chunk" at the time of sub division, plus, 1/2 share of the costs of the sub division plus the costs of sale itself.

The 50% general exemption will apply if there is more than 365 days between the date of the original purchase and the date of sale of the sub division.

I hope that this helps and that I ahve not been too vague.

Dale
 
As long as he's not carrying on an enterprise (etc.) and therefore not required to be registered for GST, then there shouldn't be any GST implications.
 
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