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Sub-dividing land: Tax Implications

Shared from Tax Insider: Sub-dividing land: Tax Implications
By Jennifer Adams, July 2024

Jennifer Adams considers the reasons a landowner may wish to separate land from their main residence and the possible tax implications in doing so.  

Subdividing land will generally be for one of the following three purposes; where the owner intends to: 

  1. develop the land to retain it for a specific purpose (e.g., building a separate 'granny annexe'); 

  1. develop the land for selling at a profit or for renting out; or 

  1. sell the land to a third party for development and sale. 

Building a ‘granny annexe’ 

Building a 'granny annexe' in the grounds of an existing main residence does not have any immediate direct tax implications. However, issues may arise when considering the main residence's

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