Roll-Over Relief for Tenants in Common Subdividing Land
Tax Ruling TR 97/4 outlines conditions for roll-over relief available to tenants in common who subdivide land and buildings under strata title laws:
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Ownership as Tenants in Common: Two or more individuals hold land and a building as tenants in common.
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Exclusive Occupation Rights: They agree to grant each tenant exclusive rights to occupy, use, and enjoy specific stratum units.
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Subdivision into Stratum Units: The land and building are subdivided into relevant stratum units under strata title laws.
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Transfer of Interests: Each tenant transfers their interests as tenants in common and rights over their stratum unit, becoming the registered proprietor of the corresponding stratum unit.
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Elect Roll-Over Relief: They elect for roll-over relief under former S.160ZZPG (now S.124-190).
This relief potentially applies to newly constructed residential, commercial, or industrial buildings with two or more self-contained dwellings or premises.
If roll-over relief applies, any capital gain or loss from disposing of interests in the land and buildings is disregarded. The treatment of the acquisition date depends on whether the interest was acquired before or after 20 September 1985.
Note that if the land is held as trading stock, roll-over relief for strata title subdivision may not be useful, as any capital gain made on partitioning the land would already be disregarded.
Additionally, stamp duty relief may be available in some states or territories, ensuring each tenant acquires a lot equivalent in value to their interest as a tenant in common.
Got questions? Reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.
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