Subdividing the Aussie dream

Whether you are a homeowner with land to subdivide or an investor involved in a property development project – growth in property prices have fuelled increasing opportunities in recent years to receive a healthy windfall from property sales.

But regardless as to whether you’re cutting your block in half or buying and developing land – you need to know how you’ll be taxed, how to keep your cash flowing and how to fix accurate pricing points to avoid any unwelcome surprises from the Tax Office.

In particular, you should be aware that you may have GST obligations, even though you may not consider yourself to be carrying on an enterprise. In the ATO’s eyes, your property transaction may have the characteristics of a business deal, so it’s important to understand your position.

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Bentleys has the expertise to help you with your taxation needs.

Tax 101 for different property ownership types

The following key considerations for both property ownership “paths” will help you to navigate your way through the tax maze.

 

Subdivisions

Selling off subdivided land often triggers capital gains tax (CGT). The subdivided lot with the old house on it should maintain its CGT-exempt status, however, the vacant subdivided lot may no longer be counted as your main residence.

Property Developments

GST is payable on the sale of new residential premises, so you may need to register for GST if you are selling a newly-built property. If you decide to rent newly built property, this changes your entitlement to the GST you claimed back on the development costs.

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