Best structure to minimise tax on land sale?

[Mick and Andrea]

Ok I'm of to see an accountant shortly but thought a few of you seasoned members might have some ideas.

I'm will be hopefully settling on some land that I'm subdividing for the vendor in a few months.
Buy price 100k subdivision cost 30k sale price 190k (numbers are just close for example only).
It's currently in my own name as the plan was to build, call it my PPOR then sell tax free. For various reasons I'm not keen on building and feel in my position its best to sell the vacant lot and use the money to get another project or investment property off the ground.
I think I read somewhere if I hold for 12 months then capital gains tax is at a discounted rate but again ideally I want to move it quick.
For a small amount of stamp duty I can put it into a entity but I can't see that reducing tax.

Any ideas to dodge a tax bullet?

Thanks
Mick.

 

[Peter_Tersteeg]

Are you talking about minimising capital gains tax or land tax?

If you own property in your own name, the profit on the sale (capital gains) is taxed at your nominal tax rate. Thus the profit is added to your existing taxable income, and you'll need to pay the tax on that figure. If you hold the asset (property in this case) for more than 12 months, you'll only add half the profit to your taxable income for that year. Hence the benefit of holding assets for more than 12 months.

If you held property in a company name, there's no benefit to holding it for 12 months, but the company tax rate is 30%, which might be lower than your personal tax rate.

Given you've stated you already hold the property in your name, there doesn't really appear to be much you can do about it, unless you want to transfer it to another entity (such as a company or a trust). Doing this will mean you've got to pay stamp duty again (about 5% of the current value).

In most cases the best way to minimise tax on vacant land is to hold it in your own name for at least 12 months. There are exceptions to this however depending on your circumstances of taxable income and how long you're hold the property for.

 

[Mick and Andrea]

Thanks Peter.
Land tax is not the problem its capital gains tax.
You explained it perfectly. I will have to get the numbers crunchie and go from there.

 

[Terryw]

If you already own the land in your own name, then you are the structure.

 

[Mick and Andrea]

Good point Terry.
Technically I'm not yet the owner and I have a good chance of being able sign the land in a different name. Worst case I can transfer the land to a different entity and for the sake of stamp duty on 100k sale price to save tax I would be happy to do so.

 

[Terryw]

If you haven't signed contracts yet then look at using a discretionary trust. But consider that trusts don't get any land tax exemption in NSW (excepted fixed trusts).

 

[Mick and Andrea]

Thanks again Terry. I got some homework to do.