Tax Consequences for Developers Holding Property as Trading Stock
Special rules apply when a developer starts holding property they already own as trading stock or ceases to hold property they continue to own as trading stock.
Developer Starts Holding Property as Trading Stock
If a taxpayer's asset (like land) was not initially considered trading stock but later becomes so as part of a property development business, certain actions are triggered:
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Sale and Re-acquisition: The taxpayer is deemed to have sold the land to an arm's length party and re-acquired it at the same value.
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Electing Cost or Market Value: Under Section 70-30, the taxpayer can choose to bring the land in as trading stock at either cost or market value.
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Cost: The cost is determined based on what it would have been if the land were trading stock when acquired. If acquired for no consideration, cost is calculated differently.
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Market Value: Market value considers the land's potential use, giving weight to its utility and the likelihood of obtaining approval for that use.
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Contact for Queries
If you have any questions regarding these tax implications, feel free to reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment through our live calendar.
