Tax implication for PPOR to IP in this scenario

[Rockstar]

We built a duplex 2 yrs ago. One we sold new for 340k - was treated as development thus we paid gst and income tax on profit.

The other unit became our PPOR and still is. Each unit cost around 250k to build.
If we sell our ppor now we pay no tax or gst since we have had it for over 12 mths.

What happens tax wise if we buy a new ppor and the current ppor becomes an IP? Then, say, we sell the IP 4 mths from now.

Do we pay CGT on

a) the difference of the current market price (350k) to the sale price (likely to be 350k) ie: no tax

or

b) the difference of the cost price (250k) to the sale price - approx 100k

Thanks, RS

 

[Terry_w]

This one may be treated on capital account. Costs would be apportioned to determine the cost base. But since you have been living in it as a main residence then the cost base may become the value as of the date you move out, depending on a few things.

GST may also still apply as the property is less than 5 years old.

 

[Rockstar]

Thanks Terry, Similar to what my accountant thought when I called him after I posted this earlier.

Looks like in this case we should put effort into selling it off and keep clear of any tax implications - which could be substantial.

Have an investor looking for a duplex booked in for an inspection on Thursday. They will be hungrier to buy now that rates have fallen again.