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Tax when building

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  • Tax when building

    Hi. I’m hoping for some advice in relation to buying a section, building and ultimately selling the finished property. I’m aware I will have to pay tax on profits but how is the profit calculated when it’s a build? Is it simply a case of me justifying all the build costs, adding to the section price and financing costs and then deducting from the new sale price? Many thanks

  • #2
    You pay tax on profits. Profits are sales proceeds less associated costs. There should be no 'justifying' of the build costs, just tracking of these. For simplicity, I'd recommend a single bank account being used for all related costs.

    Be aware that if this is a regular thing you should be registering for GST, but this relies on there being a 'continuous activity' taking place - a single house is unlikely to meet this threshold.
    AAT Accounting Services - Property Specialist - [email protected]
    Fixed price fees and quick knowledgeable service for property investors & traders!


    • #3
      Hi Daviesmw,

      I would suggest you get some expert advice.

      Income tax and profit - there can be better ways to structure, so that you minimise the tax paid.

      GST - You need to get some full advice on this. You are doing more than simply buying a section and selling it, so you need to consider GST carefully. This can have an impact on how you purchase the section as well!

      Book a free chat here
      Ross Barnett - Property Accountant