Taxable capital gain?

Question from Danny updated on 5th March 2018:

Four years ago I bought an apartment for rental, which has always been rented. Last year my partner and I created a LTC and bought a section. A few months ago I sold my rental apartment, and used that money to buy a franchise business and pay down that section. Now we are thinking about building our own home or a rental property on that section. Will any choice have a different impact on the taxation of the capital gains obtained for the sale of my apartment? Or as my original intention wasn't sell it will there not be a problem?


Our expert Mark Withers responded:

Your sale appears to have been outside the two year bright line test and provided you did not buy it with the intention to dispose of it and provided you are not associated to a dealer or developer of land the gain on sale is a capital gain. The use that you now put the funds to does not impact the question of whether the capital gain is taxable.

But do note that the bright line test is set to be extended from two years to five years later this year:

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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