Hi all wondering if someone can help.
Purchased house and land in 1989. It has been used as a investment providing a rental income for over 20 years.
Land is to be subdivided into two blocks. The existing house at the front of the block will be demolished and 2 new dwellings
(townhouses) to be built.
Questions:
Once sub divided will the front sub division still be considered to have already be owned for 12 months if a brand new dwelling is built on it (in regards to 50 percent discount)?
Will any part of the new rear division be considered subject to capital gains tax if it is used as your primary place of residence? (Will it be considered as a brand new asset that has never provided an investment return? - Will this write off any capital gains tax owing on the land?)
thanks.
https://www.ato.gov.au/General/Capital-gains-tax/In-detail/R… seems to have your answers.
It seems your cost base remains date of acquisition.
CGT will be apportioned. You would pay CGT on sale of the portion not used as PPOR, and it seems you would get CGT exemption on portion used as PPOR.
I am not an accountant/tax agent, so get some professional advice to confirm.