CGT on land division

le tueur · Feb 19, 2021 1:59 pm

Can someone explain how this works please. Nobody seems to be able to give me a definitive answer.

If I bought the property and house for $190K, land division costs $30K

My current PPOR has the house on it, and is valued at $240K and size of land is 594/1024 sqm

I have already hit the maximum rent period on my PPOR so I can't rent without at some stage paying CGT

Vancant block $100K land size is 420sqm (Will build house on it and move into it)

What will be the CGT payable on both the current PPOR and the vacant block?

Tax rate is 30% at a discounted rate of 15% as I've owned longer than 12 months

I'm confused as to how they will work it out.

becjarrettdalton · Feb 19, 2021 2:23 pm

This is only a question for your accountant, sorry!

If I am following, you've moved out of your PPOR for 6 years - the 6 year rule - and now you're going to sell that place? If you're moving into the block it becomes your PPOR and if you aren't selling it then no CGT on it right now - I think, confirm with your accountant!!

And on the other, it depends on base cost, purchase costs, sale costs and value when you moved out - so many variables.

le tueur · Feb 19, 2021 2:34 pm

becjarrettdalton

This is only a question for your accountant, sorry!

If I am following, you've moved out of your PPOR for 6 years - the 6 year rule - and now you're going to sell that place? If you're moving into the block it becomes your PPOR and if you aren't selling it then no CGT on it right now - I think, confirm with your accountant!!

And on the other, it depends on base cost, purchase costs, sale costs and value when you moved out - so many variables.

This is why I don't understand.

I understand what you're saying about the current house, but what I don't understand is how they split the value up on the land if I choose to sell which WILL be subject to CGT. How do they determine the value of a split property that isn't 50%.

plc · Mar 02, 2021 10:54 am

le tueur

becjarrettdalton

This is only a question for your accountant, sorry!

If I am following, you've moved out of your PPOR for 6 years - the 6 year rule - and now you're going to sell that place? If you're moving into the block it becomes your PPOR and if you aren't selling it then no CGT on it right now - I think, confirm with your accountant!!

And on the other, it depends on base cost, purchase costs, sale costs and value when you moved out - so many variables.

This is why I don't understand.

I understand what you're saying about the current house, but what I don't understand is how they split the value up on the land if I choose to sell which WILL be subject to CGT. How do they determine the value of a split property that isn't 50%.

Below is from the ATO website with examples. I think there needs to be valuations conducted to work out land values, etc. However Bec is right, talk to an accountant beforehand as this is a complex area and you need to know what your options are.

https://www.ato.gov.au/general/capital-gains-tax/your-home-and-other-real-estate/subdividing-and-amalgamating-land/