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Bright line date transaction costs12/8/2023 If land is sold or gifted for a sum below its market value when it would otherwise be subject to tax, the transaction will be deemed to take place at the market value at the time of the sale. Parents trying to help their kids into homes should be aware they could be caught out by bright-line tax. If you’re concerned about this, it’s important to speak with an accountant. You should be aware that any profit from a gain in property value is considered taxable income, which may affect other obligations or entitlements based on income, such as student loan repayments, child support payments and Working for Families. You’re helping your children into their own first home and you’ll be a co-owner. You’re planning to claim a tax deduction on the acquisition of the property.You’re planning to undertake a profit-making scheme or development.you’re planning to use it for something other than your main home for more than 12 months) You’re intending to change how the property is used (e.g.We suggest you seek tax advice from an accountant if any of the following apply to you: However, when you purchase a property off the plans, the date of acquisition will be the date recorded on the sale and purchase agreement for the purchase (and the date of disposal is the date recorded on the agreement for the sale). a property with an existing house), the date of acquisition for bright-line purposes is the date of transfer of title, not the date of the agreement. Note: when you’re purchasing a standard property (i.e. This means you could claim interest relating to the new build as an expense against your income from residential property (although it’s important to seek accounting advice regarding this). New builds also have the benefit of interest deductibility. You purchased the new build more than 12 months after it received CCCĪlthough new builds only have a bright-line period of five years, all other standard bright-line rules apply.The property is sold as a section (with no new build and CCC).You won’t qualify for the new build bright-line test if: New builds acquired on or after 27 March 2021 are subject to a bright-line period of only five years, as long as a code compliance certificate (CCC) for the build has issued before you sell the property. How does the bright-line test affect new builds? It also can’t be used if you have a regular pattern of buying and selling your main home. The main home exemption can’t be used more than twice in the two-year period leading up to the property sale. more than 50% of the time you’ve owned the property), you won’t be liable for bright-line tax. If the property was used as your main home for most of the bright-line period (i.e. In short, this exclusion applies on an all-or-nothing basis.
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