{"id":9541,"date":"2016-10-13T01:00:24","date_gmt":"2016-10-12T14:00:24","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=9541"},"modified":"2016-10-13T01:00:24","modified_gmt":"2016-10-12T14:00:24","slug":"buying-part-of-my-neighbours-land-ken-raiss","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/buying-part-of-my-neighbours-land-ken-raiss\/","title":{"rendered":"Buying part of my neighbour's land – Ken Raiss"},"content":{"rendered":"

 
\nKen Raiss<\/strong> answers a question about possible tax implications when doing a subdivision by acquiring a portion of a neighbour\u2019s land.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:\u00a0 <\/b>This time, we\u2019re going to answer a question from Darryl, who writes and says, \u201cIf I\u2019m doing a subdivision on someone else\u2019s block of land (I\u2019m buying their back yard), what tax implications do the original owners have, assuming it is the principal place of residence, and never been rented, etc.? That is, are they required to pay capital gains tax? And does it make a difference if it\u2019s before September 1985 or after September 1985, assuming the person has been living in the property over 12 months?\u201d
\nWow. Okay, a number of issues there, I guess. But no doubt, the man who will answer them quite easily, Ken Raiss, from Metropole Wealth Advisory<\/a>
\nG\u2019day, Ken.
\nKen:\u00a0 <\/b>G\u2019day, Kevin. I hope things are well.
\nKevin:\u00a0 <\/b>Yes, they are indeed. Now, what about Darryl\u2019s question there?
\nKen:\u00a0 <\/b>Yes, great question. Well, normally, when you sell your home, there is no tax, but in this case, the circumstances are different.
\nThe main residence exemption normally applies to the building and, therefore, the land needed for that. As such, if part of the land is sold \u2013 as in this case \u2013 it is not recognized as your main residence, and that part of the land, when sold, would therefore be subject to tax.
\nWe would need to do a calculation to determine how much tax. What we do is we go back to the original price paid for the house and land, and then work out what the land component was, and then pro-rata it to the amount of land sold.
\nWe would then calculate the capital gains tax after taking into account all the additional costs \u2013 such as subdivision costs, lawyers, any other special planning, or whatever \u2013 to then calculate the capital gain. If they\u2019ve held it more than 12 months, you\u2019d get the normal 50% capital gains tax discount. But if they had bought it before capital gains tax legislation came in \u2013 i.e. September 1985 \u2013 then there would be no tax.
\nSo, we need to get some pencil and paper out and do the sums.
\nKevin: <\/b>\u00a0Would you call a valuer in to do that, Ken?
\nKen:\u00a0 <\/b>Look, you would, but they\u2019d have to obviously go back to the date of purchase, subtract the building cost to get the land components, and then pro-rata it. So, if there were 700,000 square meters of land and you sold half of it, 50% of those costs would go to the back yard that\u2019s sold.
\nYou\u2019d need to do that proper evaluation because you have to understand the building cost at the time of purchase, the cost for the building, and therefore, the residual being for the land.
\nKevin:\u00a0 <\/b>Yes, okay. Well, I guess the bottom line question here from Darryl was whether or not tax is payable, and the answer to that is yes, it is.
\nKen:\u00a0 <\/b>Correct, unless, as he made out, it was bought before the capital gains tax legislation came in.
\nKevin:\u00a0 <\/b>Yes, very clear. Ken, thank you so much for your time. Ken Raiss\u00a0from\u00a0Metropole Wealth Advisory<\/a>
\nThanks, Mate.
\nKen:\u00a0 <\/b>A pleasure.<\/p>\n","protected":false},"excerpt":{"rendered":"

  Ken Raiss answers a question about possible tax implications when doing a subdivision by acquiring a portion of a neighbour\u2019s land.   Transcript: Kevin:\u00a0 This time, we\u2019re going to answer a question from Darryl, who writes and says, \u201cIf I\u2019m doing a subdivision on…<\/p>\n","protected":false},"author":176692471,"featured_media":9543,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,35,17,22,25],"tags":[101],"class_list":["post-9541","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-development-topic","category-property-investment","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nBuying part of my neighbour's land - Ken Raiss - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/buying-part-of-my-neighbours-land-ken-raiss\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Buying part of my neighbour's land - 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