Home owners hoping to capitalise on the appetite for property development by working with neighbours or partnering with a builder should be wary of a surprise Capital Gains Tax or Goods and Services Tax bill. Scott McGill, Partner, Private Clients and Tax Consulting, looks at the biggest tax risks you face when selling your home.
The headline figures look tempting: 29 townhouses in Perth sold for more than $33 million, a $60 million price tag for 13 strata units in Chatswood, and more than $80 million for 55 units in Macquarie Park.
In each deal, neighbours were able to band together to get a much better dollar price for their homes from developers by amalgamating their properties.
But understanding how the Australian Tax Office treats these horizontal collective sales (when land is amalgamated) or vertical collective sales (when apartments are sold together) can be complex.
The trend has had serious momentum over the past couple of years, particularly in Sydney where the booming property market has tempted home owners to go beyond simply listing their properties on the market.
Instead, they might band together with their neighbours to sell their combined lots to a developer for a higher price or delve into the world of property development and develop the lots themselves.
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Partner, Private Clients and Tax Consulting
+61 2 8236 7880
Pitcher Partners Sydney
Level 22 MLC Centre, 19 Martin Place, Sydney NSW 2000