When do we pay CGT for townhouse developments

[brodie_newbie]

Hi everyone,

I'm going to build 2 townhouses as investment properties (get rent) and my friend told me that I need to pay CGT the day the property started to receive rent. Is that true?

From my understanding, CGT is always payable when the property is sold.



So if CGT is payable when I receive rent, how do I pay?

Thank you very much.

 

[DaveM]

CGT payable on sale. And GST as well if not held for 5 years.

 

[Terry_w]

Hi everyone,

I'm going to build 2 townhouses as investment properties (get rent) and my friend told me that I need to pay CGT the day the property started to receive rent. Is that true?

From my understanding, CGT is always payable when the property is sold.



So if CGT is payable when I receive rent, how do I pay?

Thank you very much.

Is your friend qualified? If not take what they say as incorrect unless verified (like you are doing now)

 

[spludgey]

And GST as well if not held for 5 years.

Oh wow, I wasn't aware of that. I'm actually looking into developing on one of my properties right now (though not seriously). That changes things a little bit, as it now not only has to stack up from an equity gain point of view, but also from a cashflow one.
Thanks, for pointing that out.

 

[Ausprop]

Oh wow, I wasn't aware of that. I'm actually looking into developing on one of my properties right now (though not seriously). That changes things a little bit, as it now not only has to stack up from an equity gain point of view, but also from a cashflow one.
Thanks, for pointing that out.

not always. Read the 'bantacs' free booklet 'how not to be a developer' (because you don't want to be classed as one).

 

[mflying]

i am not tax expert, but CGT is payable on event of sale!

if time line work out, sign one contract before June and one after July and tax liability may split in to two financial year (in event you sell both townhouse)

this is my understanding, best to check with qualified adviser.

 

[brodie_newbie]

Thank you very much everyone.

This put my mind in ease. From my understanding, CGT is always payable when the property is sold. That's why when my friend told me that I need to pay it when the first rent is received, I was in massive shock and worried about how to get the cash to pay that...

Thank you.