I bought a large block of land 50/50 with a friend which we are subdividing into two lots. We're building two separate homes on the land, one for each of us. By the time the houses are finished and the land subdivided,it will be 12 months or so since we settled on the original block of land. If I sell my house and settle when the land is subdivided, do I qualify for the 50% reduction in capital gains tax? If I don’t sell the house then, how long would I have to live in it before it would be exempt from capital gains tax?
Answer: Typically the 12 month period starts when you’ve acquired the asset. If you’ve owned the asset for a period of more than 12 months, you may be eligible for a 50% discount. If upon the completion of property you moved in as soon as practicable, then you can nominate the dwelling as your main residence (MR) when acquired – the condition is that no other property is nominated as your MR. This generally means it will be exempt from CGT. You can use your main residence to generate income for a period of up to six years before it becomes liable for CGT. If another property is selected to be your main residence, your other property will accrue capital gains. For a more detailed discussion of your circumstances, please contact property investment hub. DISCLAIMER: Readers should not act on the information above without obtaining professional advice relevant to their circumstances. It is intended as information only.today. For more advice on property investment issues, check out our