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Edited version of your written advice
Authorisation Number: 1051436556885
Date of advice: 3 October 2018
Ruling
Subject: CGT - Pre-CGT Assets
Question
Will your Pre-CGT land retain its Pre-CGT status if 50% of that land is sold to another party as tenants in common and a new dwelling is built on that land?
Answer
Yes.
This ruling applies for the following period:
Year ending 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You own land with a dwelling that was purchased prior to 20 September 1985 (Pre-CGT).
The land was valued at $X.
The dwelling on the land was valued at $0.
You are looking to sell 50% of your interest in the land to another party and hold the title as tenants in common.
At a future date the dwelling on the land may be demolished and a new dwelling built at a cost of approximately $Y.
Relevant legislative provisions
Section 100-25 of the Income Tax Assessment Act 1997 (ITAA 1997)
Subsection 108-55(2) of the ITAA 1997
Reasons for decision
As per section 100-25 of the ITAA 1997, as the land and dwelling were purchased Pre-CGT the 50% share in the property that is retained will remain Pre-CGT in nature. The demolishing of the dwelling on the land will not change the Pre-CGT nature of the land but the new dwelling (costing approximately $Y) will be Post-CGT in nature as per subsection 108-55(2) of the ITAA 1997.