Unlocking Wealth through Land Subdivision: A Retirement Strategy (Oct 24 Tax Update)

Relevant For:

Retirees and homeowners with large properties seeking to generate retirement income by subdividing their land.

Key Points:

• Subdividing land can unlock wealth but has tax implications.
• Each subdivided block is treated as a separate asset, subject to CGT.
• Main residence CGT exemption applies to the home and up to two hectares, not typically subdivided vacant land.
• Sale proceeds may be eligible for downsizer contributions, but only if conditions are met such as selling a dwelling as part of the sale.
• Seek expert advice before proceeding with a subdivision.

Full Article:

Many retirees find themselves in a situation where they are asset-rich but cash-poor. For those who own large properties, subdividing unused land and selling it can be an effective strategy to generate funds for retirement. This could allow you to invest in income-generating assets or provide a financial cushion for later years. However, it is vital to be aware of the tax consequences, particularly capital gains tax (CGT), and the limitations on downsizer contributions.

When you subdivide a block of land,