Browse Forums Building A New House 1 Jan 20, 2013 10:01 pm Hey All, My sister is in the final stages of building a 3br home by a volume builder. After settlement, she will have to put in driveways,fencing,landscaping,etc. She has been offered a promotion interstate and will be selling the property once everything is completed. She is currently living with me until the property is finished. Her intention was for this to become her primary residence but must be sold due to financial commitments. There is a very good chance she will make a nice little profit, considering it is/was her primary residence, will she need to pay GST/tax on any profit made? Not sure if this is a grey area or not.... Never argue with an idiot. They will only bring you down to their level and beat you with experience. George Carlin Re: Building and selling - Tax 3Jan 21, 2013 7:56 am The house is still under construction, once completed she will live there for around 3-5 months then sell Never argue with an idiot. They will only bring you down to their level and beat you with experience. George Carlin Re: Building and selling - Tax 5Jan 21, 2013 9:47 am I would think if she is actually going to live in it once it is built before she sells it would then be considered her principle place of residence which means you don't pay capital gains on the profiting from the sale, as long as she doesn't purchase another home before it is sold. But I'm not expert, it might be worth her talking to an accountant to confirm the tax implications... Re: Building and selling - Tax 6Jan 21, 2013 10:24 am Building and CGT can be a tricky one as there can sometimes be CGT payable on the land portion. You can choose to treat land as your main residence for up to four years before the dwelling becomes your main residence in certain circumstances. It will come down to when the land was purchased and her living arrangements at the time of purchase as to whether an exemption will apply. fmac be worth her talking to an accountant to confirm the tax implications Have a read of this first - http://www.ato.gov.au/36890.htm. Won't say it's self explanatory, but it will give you a bit of an idea and can help you work out timelines I would also recommend speaking to an accountant, who will be able to map out the timelines and determine whether or not an exemption would apply. Re: Building and selling - Tax 7Jan 21, 2013 11:45 am When did she purchase the block of land and did she own any other home when she bought the property? fmac it might be worth her talking to an accountant to confirm the tax implications... I would agree. At this stage based on the very limited information I have, I would say should wouldn't be up for CGT. And definitely not GST. However my advice is probably worth as much as she's been charged for it Re: Building and selling - Tax 8Jan 21, 2013 12:21 pm Ill try to provide more info guys.... Block was purchased in feb 2011 off the plan, recieved titles August 2012. Began construction September 2012. Expected completion date April 2013. At the time of purchasing land, she owned a 2 br appt. in melb CBD. Was sold in August 2012 to finance land when it settled. The land was paid in full on settlement, and a construction loan was taken out. Never argue with an idiot. They will only bring you down to their level and beat you with experience. George Carlin Re: Building and selling - Tax 9Jan 21, 2013 2:19 pm If you live in a home as your primary place of residence for anything longer than 6 weeks you should not have to pay capital gains on it. It does'nt matter if you own something else, or buy something else in the meantime as long as that is your primary place of residence and you can provide proof of it ie bills in you name going to that address, rates notices to that address, utilities connected in your name at that address even if you get a stat dec signed - Capital Gains should not apply. The tricky part come if you rent the house out at any stage and do not live in, then it gets intresting for capital gains. You do not pay GST on property unless it is a going concern - used to generate an income in a business sense, ie Orchard, Farm, Hotel, Pub etc However as the others have indicated check with an accountant just to make sure all the T's are crossed - It's always good to get professional advice in this situation. Goodluck Re: Building and selling - Tax 10Jan 21, 2013 2:28 pm If it was your principle place of residence and you decide to rent it out and don't buy another house that becomes your principle place of residence you can rent the property out for 6 or 7 years, cant remember the exact number of years, before you have to pay capital gains the exemption applies only to your principal place of residence - so you must live in it. The 200 days is continuous. You also have to apply for the exemption. 2 13321 If it's your primary residence then there is no tax deductions to be made. 4 125352 You should be able to encase the sewer but you will need it designed and approved and access to lot 580 to do the work 2 17168 |