Tax on sale of land?

[Crossover]

I have elderly in-laws who need to return to NZ due to requiring ongoing medical care. They don’t own any property in NZ and can’t afford to buy anything or even rent. My brother in law wants to buy a rental property that they can live in.
My question is – if I subdivided the land and sold the half section to my brother-in-law to build a house for my in-laws, would I be taxed on the sale?

[Anthonyacat]

If you subdivided what land? Are you looking to buy a section, subdivide it, and sell it off? Yes, you would be taxed on the gain on sale. Are you looking to subdivide a section you have owned for 40 years? Chances are that wouldn't be taxable.

Your brother in law should also be aware of tax consequences of renting below market rates, especially to family. I presume it'll be below market anyway, since you've said they can't afford to rent.

[Perry]

Your brother in law should also be aware of tax consequences of renting below market rates, especially to family.

There's an interesting potential quirk, hovering around the idea that you've described.

Why sub-divide, with all the costs involved? Would a secondary dwelling be adequate?

If so, as your in-laws are family, they could pay (non-taxable) board to you. As I dimly
recall, a scenario like that has one or two other consequences, but the biggest one -
historically - is no longer an issue. That being claiming depreciation ineligibility.

Come to some sort of arrangement with the brother-in-law that satisfies the housing
for the in-laws requirement, but also, perhaps (say) gives him a mortgagee status
over the property (yours), so he has some type of security over his parents' PPOR.
Or something like that.

[Rosco]

I have elderly in-laws who need to return to NZ due to requiring ongoing medical care. They don’t own any property in NZ and can’t afford to buy anything or even rent. My brother in law wants to buy a rental property that they can live in.
My question is – if I subdivided the land and sold the half section to my brother-in-law to build a house for my in-laws, would I be taxed on the sale?

Rental property? If they can't afford rent, then can't be a rental!

Subdivision taxable? There are so many ifs and buts, so you really should get expert advice on this. There is an exemption (ie the subdivision isn't taxable) for subdividing your personal house, under certain size limits that may apply. So you might find this advice very quick and easy, but its impossible to give full advice over a forum.

As Perry mentioned, building a minor dwelling without subdividing could be a good option.

Ross

[Meehole]

I would seriously look at the possibility of them getting medical care here when they are of no fixed abode and no means of income. Things have tightened up in the hospitals as I have just discovered with my own family in the past 3 weeks. Many hoops to jump over and many forms to complete, it is not a given anymore.