Hi guys. Hope you guys can help here.
Situation: A relative has a block of land with main house on it and they are currenty living in it. They are currently thinking of sub dividing it and building 2 townhouses on it with the plan of living in one house and selling the other one.
The question is: from when would the CGT be calculated? From the day when the land was originally bought or from the day of subdivision.
Speaking to a solicitor / town planner / council to check it can actually be done and approved is a good idea as well.
Is CGT even applicable in this case?
Source: I called the ATO and they suggested I ask here or whirlpool or r/Australia
The ATO suggested asking ozb/whirlpool/reddit?
Yes
The ATO are pretty lazy. They've even outsourced their agents to India. They're probably not keeping an eye on them either as they've offered to clear my tax obligations for a few iTunes gift cards.
Good find. I hope for ops sake that his relatives name is Mike and not Kym.
That sounds a bit unfair to me.. so if someone bought a house to live in 10years ago and decided to subdivide now as a part of realisation would have to pay CGT from when they bought the house.. Even though they made no income from it for 10years??
Also, Would they get deduction for half the interest they paid from the date of purchase??
Your relative is best off seeking advice from an accountant. Couple hundred dollars to ensure everything is done correct is worth it