SUBDIVISION AND THE BRIGHT-LINE TEST
Q If I subdivide the rental property I have had for 20 plus years, so the original house is on its own title and then either build a new house or move a second hand home onto the second title, is the rental affected by the bright-line test if it is sold?
Secondly, would the new house be subject to the bright-line test?
A For bright-line purposes, land subdivision is on the “purchase of dirt” rule, ie the date the land itself was acquired determines the bright-line rather than any date a new legal title is issued or a new house is built.
That said, remember that section CB 12 taxes a gain derived from the subdivision of land where the development or division occurs within 10 years of acquisition and the work is more than minor. Section CB 13 can also tax a gain from subdivision beyond
