With house prices rising and well-located land becoming scarce in cities, many Australian are looking for creative ways to tap into the value of their own backyard. Some subdivide, while others take the knock-down and rebuild route.
But like most things in life, the tax man takes a close interest when it comes to redeveloping your property, so it's important to get professional advice to ensure you don't end up with a big tax bill.
If you sell a property bought on or after 20 September 1985, you are liable for capital gains tax (CGT) on any capital gain you make. One bright spot is that you are generally eligible for a full exemption on your CGT liability when you sell your principal place of residence (PPR) if you satisfy the conditions for a main residence exemption.