Call us: (08) 6267 2200
reception@optimapartners.com.au
  • PAY MY INVOICE
Optima PartnersOptima PartnersOptima PartnersOptima Partners
  • Home
  • About Us
    • Meet The Team
    • Testimonials
  • Our Services
    • Business Advisory
    • Taxation Services
    • Self Managed Superannuation
    • Bookkeeping Services
    • Corporate Secretarial Services
  • Latest News
  • Contact Us

SUBDIVIDING PROPERTY – AVOID UNNECESSARY TAX

    Home Blog SUBDIVIDING PROPERTY – AVOID UNNECESSARY TAX
    NextPrevious

    SUBDIVIDING PROPERTY – AVOID UNNECESSARY TAX

    By admin | Blog, Rental / Property Investment, Tax time / planning | 0 comment | 30 May, 2016 |

    house with big yard

    SUBDIVIDING PROPERTY

    AVOID UNNECESSARY TAX

    hazel treeI was with a friend a while back and we were reminiscing of the good old days kicking a footy in his parent’s back yard.  Occasionally one of us would be a little too overzealous trying to impersonate Gary Abblett Snr and the ball would fly over the back fence.  This would usually lead to an argument and paper scissors rock to work out who would jump over to retrieve the ball.  Oh how times have changed for most kids these days, as most of these properties have been long subdivided and there isn’t much room between the back door of a house and the boundary to simulate the 1994 grand final!

    Subdividing property – I’m sure that we know at least one person who has done this or is considering doing it.  As most people know, our primary residence is generally capital gains tax (CGT) exempt and there is a common misconception that this applies when the property is subdivided.  An honest mistake, although in reality this is not the case.playing in the backyard

    Once a property is subdivided, the dwelling (home) is now on a separate title to the section adjacent (which used to be the grassed area of the backyard).  The issuing of separate titles will result in an existing asset being converted into 2 or 3 new assets.  Once this happens the main residence exemption continues on, but only on the title which the dwelling is on.  The title/s which used to be the cricket or footy pitch become new assets, which are taxable once sold.

    ato data matchingDue to this misconception, many taxpayers have subdivided their land and sold the back lot off and not bothered telling their accountant.  In years gone by this might have “slipped through the cracks” and been missed by the ATO.  But as the ATO’s data matching has become more sophisticated it has become much easier for property transactions to be identified and subsequently audited/reviewed by the ATO.

    If you are considering subdividing or developing a block of land speak to us so we can discuss any potential tax consequences that may arise from the transaction.  We may be able to suggest a more tax effective solution so you can maximise the return from your property assets.

    rossario small

     

     

     

     

     

    ROSS STAGNO

    Snr Accountant

     

    No tags.

    Leave a Comment

    Cancel reply

    Your email address will not be published. Required fields are marked *

    NextPrevious

    Optima Partners is an energetic and innovative accounting, taxation and business advisory firm with offices in Osborne Park, Guildford and Fremantle.

    To discover how we help businesses across Perth please drop us a line today.

    Tel: (08) 6267 2200

    Email: reception@optimapartners.com.au

    Osborne Park Office

    Suite 3, 128 Main Street,
    Osborne Park,
    WA 6017

    Office Hours:
    Weekdays 8:00am – 5:00pm

    Postal Address

    Locked Bag 5000,
    Osborne Park,
    WA 6917

    Guildford Office

    143 James Street,
    Guildford,
    WA 6055

    Office Hours:
    Weekdays 8:30am – 5:00pm

    Fremantle Office

    Level 1, 72 Marine Terrace,
    Fremantle,
    WA 6160

    Please call for appointment

    Copyright 2021 The Small Business Lounge | All Rights Reserved
    • Home
    • About Us
      • Meet The Team
      • Testimonials
    • Our Services
      • Business Advisory
      • Taxation Services
      • Self Managed Superannuation
      • Bookkeeping Services
      • Corporate Secretarial Services
    • Latest News
    • Contact Us
    Optima Partners