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  1. #1

    Default Will there be any tax when subdividing the family home?

    Hi all,

    My plan is to build 2 houses on the back of my family home which we lived for more than 10 years. We want to subdivide them and sell the existing one and one of the new houses to pay off mortgage and free up some money. Will I have to pay tax on any or both of the houses that we sell? Whats the best way to go about this to have the minimal tax implications?


    Many thanks in advance.

  2. #2
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,673

    Default

    Hi,

    It depends. Tax rules are complicated and depends on the exact circumstances. You really need to get some expert advice from a property accountant

    Some basics
    1) Generally if you subdivide and sell, the gains are taxable. There are some exemptions for personal home and if owned over 10 years before subdivision commenced.
    2) But these are just for the land. If you then create a new activity of building to create a profit, this will still be taxed.

    Therefore spend a little bit getting some expert advice, as doing this the smart way will save thousands.

    Also need to consider GST too.

    Ross
    Not sure where to start, book a free chat for 5-10 minutes https://cswaikato.co.nz/services-pro...s-hamilton/201
    Ross Barnett - Coombe Smith Property Accountants



 

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