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Property problems: Intent determines taxes on property sale profits
Saturday 15th of May 2004
these circumstances is necessarily subject to income tax.
Whether income tax is payable will depend on other facts surrounding your purchase and/or treatment of the property since you bought it.
If you bought the property intending to re-sell it, rather than hold long-term, income tax will be payable on the profit - generally the sale price less purchase price and costs of sale.
A sale four years after purchase does not necessarily indicate that you acquired the property for the purpose or intention of resale. But it is the intention or purpose at the time of acquisition which is relevant to this question and which may be disclosed in contemporary documents - such as bank records if you took out a loan to buy the property. Inland Revenue can gain access to such documents if it wishes to explore the background to a purchase in checking whether the profit is taxable.
Even if you bought the property other than with a resale in mind, the profit on the sale would nevertheless be subject to income tax if, at the time you acquired the property, you or an associated person carried on the business of dealing in land, a business of developing or dividing land into lots, or a business of erecting buildings.
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Whether income tax is payable will depend on other facts surrounding your purchase and/or treatment of the property since you bought it.
If you bought the property intending to re-sell it, rather than hold long-term, income tax will be payable on the profit - generally the sale price less purchase price and costs of sale.
A sale four years after purchase does not necessarily indicate that you acquired the property for the purpose or intention of resale. But it is the intention or purpose at the time of acquisition which is relevant to this question and which may be disclosed in contemporary documents - such as bank records if you took out a loan to buy the property. Inland Revenue can gain access to such documents if it wishes to explore the background to a purchase in checking whether the profit is taxable.
Even if you bought the property other than with a resale in mind, the profit on the sale would nevertheless be subject to income tax if, at the time you acquired the property, you or an associated person carried on the business of dealing in land, a business of developing or dividing land into lots, or a business of erecting buildings.
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