Subdivision - CGT?

[Aulyna]

Good morning all,

I am building a new house on an IP to live in, and will sell the old house after subdivision.

Let's make it some simple number for easy discussion:


Buy the IP for $400k, build new house for $300k, sell the old house for $300k.


How is the CGT calculated?

Thanks in advance

 

[Terry_w]

First y ou will have to determine if CGT will even apply. if it applies, will it apply to the whole transaction or up a the point. You will then have to apportion the house and land values for each block and work it out that way.

Don't forget GST. The old house will be new land.

 

[hpresident]

Hi Terry,

Assuming one have to pay capital gain and gst how does that work?

Assuming cost of "producing" 1 block of land is 100k (subdivision cost plus land cost)
sale price @ 200k
Capital Gain tax rate at 30%

Then one would pay 18k (1/11th for GST)
Then 24k for Capital Gain (200-18-100)k * 0.3 = 24k

Am I correct?

 

[Blair007]

http://somersoft.com/forums/showthread.php?t=101584

Hey guys heres a Link from Paul explaining the Margin scheme, a method of calculating GST for developers. It includes information about income tax and CGT. Try searching through the accounting and tax forum also, as there are quite a few threads that may help you.

cheers
blair

 

[Terry_w]

k

Am I correct?

No.

You would have to take into account the cost base of the land and first house.

No 30% tax rate either tax would depend on the owners marginal tax rate.