Joe & Mary bought a home on a large block of land (1,000m2) on a corner block with two street frontages in June 200 for $350,000. The house was valued at $120,000 and the land at $230,000. Now some 13 years later, land values in the area have increase and the local council is now looking favourably on infill projects to increase rates and higher density living.
Joe & Mary now want to downsize however like the area, so in January 2013 decided to split the block in half, with the house on one block and the back block facing the other street frontage. Joe and Mary incurred $30,000 in survey, legal and subdivision fees and $4,000 in connecting the water,power and drainage to the back lock. In March 2013 the backyard block was sold for $300,000.
As the backyard was sold separately, the main residence exemption does not apply to the land. Joe and Mary contact several local real estate agents who advised the backyard block was valued at $20,000 less than the front block with the house.
Apportionment of land value to the backyard block $230,000 Original land Value in 2000.
Divide by 2 less ($20,00/2) = $105,000 (46.65%)
Front block with house (54.35%) $125,000
$30,000 subdivision costs at (46.65%) $13,695
$4,000 connection costs at (46.65%) $1,826
Legals to sell at (100%) $2,000
Agent Commission to sell at (100%) $8,040
Cost Base of backyard block $130,561
Sale price of backyard block $300,000
Capital Gain on backyard block $169,439
If the subdivision was held for 12 months, the capital gain would be eligible for a 50% discount.
If Joe and Mary sold the front house and built on the back block their would be not CGT on the old home and the cost base on the back block would become there new principal place of residence land value cost base.
Umbrella Accountants – Property Accountants Brisbane
Principal Place of Residence Exemption Loss if Sold While Overseas Summary of how the Principal Place of Residence (PPR) Exemption is impacted by moving overseas. When Australian homeowners move overseas and become non-residents for tax purposes, selling their...
Having an investment property prior or posted to it being a principal place of residence has tricky CGT Calculations. Capital Gains Tax (CGT) is an essential consideration for property owners when selling a property used for different purposes over time. This blog...
Picture of a vacant block of land to illustrate it may be subject to land tax What is Land Tax? Land tax is a state and territory-imposed tax on the unimproved value of taxable land owned by individuals, companies, and trusts. It is calculated annually based on a...
Temporary Resident in Australia Suppose you are a temporary resident in Australia and want to purchase a Principal Place of Residence (PPR). In that case, there are restrictions and requirements you must follow, mainly governed by the Foreign Investment Review Board...
Seven changes impacting your super in 2025 Superannuation rules are constantly changing, and 2025 is set to bring some updates that could affect your retirement savings. Whether you’re just starting to build your super or already planning for retirement, keeping up...
What are the tax and investment considerations for a Granny Flat above versus a Tiny Home below? Income Tax Return Reporting - Income Streaming Tiny Homes Tiny home ownership does not have to follow the ownership interest of the underlying property ownership. For...
Secondary Dwelling From December 2023 the Victorian Government has passed planning changes to make it easier to build Granny Flats - or "small secondary dwellings", on existing homes. The Victorian Premier Jacinta Allan revealed that planning permits will no longer be...
The ATO is particularly targeting property investors that are not using the help of a specialist property tax accountant like Umbrella Property Accountant, due to the high error rate being discovered from ATO Audits. The ATO Audits into self-preparers have uncovered...
Latest view to claiming GST on NDIS SDA Properties Read part 1 here (opens in a new tab) investors in NDIS SDA Properties need to An SDA Registered Provider with NDIA having a direct management relationship with the NDIS SDA Participant, as the direct Lessor to the...
Gold Coast - Example of the Housing Rental Competing Forces Many Apartments are sitting empty most of the year, including an entire beachfront tower. Gold Coast mayor Tom Tate cited an entire high-rise sitting empty in the triple tower Jewel development at Surfers...
