Hi Everyone, firstly I’d like to apologise in advance for posting a question as my first post, and secondly I’d like to apologise for the long post.
I am looking for an accountant that I could engage to assist with the below scenario. I have already seen my regular accountant but I am not sure if his solution is the only one available.
I am also open to other peoples suggestions too.
My wife and I purchased a house with my elderly parents as tenants in common. The block it resides on is comprised of 2 lots although there is only ONE title.
The intention was to build two townhouses – one for them and one for us. The idea behind it was purely for them to have our support (ie close by, and likewise for us with babysitting etc) without encroaching on one anothers space.
We have completed the first house and the second is at lockup and should be completed with the next 3 months.
I am about to lodge the sub division shortly and the accountant has advised that this will trigger a capital gain which I will be liable for even if I do not sell any property.
He advised to have the current project valued by a valuer and then subtract the cost of the project from this figure and pay CGT once the subdivision is finalised. This will result in CGT being paid on current value and regardless of when/if we decide to sell, there will be no further tax to be paid.
The other option is to claim one residence as our PPOR and then pay GST and Rev or CGT (can’t remember which one ATM) on the other residence.
He advised that with this option I will most likely be audited as I would need to claim a lump sum of GST. The problem with this is, I have not kept proper records, ledgers etc for the build therefore I would surely be in strife. Please remember, this project was purely for family sake and was never a venture to make money, therefore there was no need to keep a detailed record of expenses.
Some points to note:
1. 4 names are on the title as tenants in common.
2. No other property was claimed as a PPOR by either party
3. The land/house that was knocked down has been owned just over 4 years
4. The title was made of two lots, although only the one folio number
5. Subdivision has not been lodged yet.
6. Both houses are completely separate, ie no common property
7. Idea was for lot 1 to be in mine and my wifes name when complete and Lot 2 to be in my parents name
Hopefully the above is not to confusing.
Regards,
Jeff
I am looking for an accountant that I could engage to assist with the below scenario. I have already seen my regular accountant but I am not sure if his solution is the only one available.
I am also open to other peoples suggestions too.
My wife and I purchased a house with my elderly parents as tenants in common. The block it resides on is comprised of 2 lots although there is only ONE title.
The intention was to build two townhouses – one for them and one for us. The idea behind it was purely for them to have our support (ie close by, and likewise for us with babysitting etc) without encroaching on one anothers space.
We have completed the first house and the second is at lockup and should be completed with the next 3 months.
I am about to lodge the sub division shortly and the accountant has advised that this will trigger a capital gain which I will be liable for even if I do not sell any property.
He advised to have the current project valued by a valuer and then subtract the cost of the project from this figure and pay CGT once the subdivision is finalised. This will result in CGT being paid on current value and regardless of when/if we decide to sell, there will be no further tax to be paid.
The other option is to claim one residence as our PPOR and then pay GST and Rev or CGT (can’t remember which one ATM) on the other residence.
He advised that with this option I will most likely be audited as I would need to claim a lump sum of GST. The problem with this is, I have not kept proper records, ledgers etc for the build therefore I would surely be in strife. Please remember, this project was purely for family sake and was never a venture to make money, therefore there was no need to keep a detailed record of expenses.
Some points to note:
1. 4 names are on the title as tenants in common.
2. No other property was claimed as a PPOR by either party
3. The land/house that was knocked down has been owned just over 4 years
4. The title was made of two lots, although only the one folio number
5. Subdivision has not been lodged yet.
6. Both houses are completely separate, ie no common property
7. Idea was for lot 1 to be in mine and my wifes name when complete and Lot 2 to be in my parents name
Hopefully the above is not to confusing.
Regards,
Jeff