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DB 27: Amount from major development or division and not already in income
or “Tax deduction for land value in major development projects not counted as income elsewhere”
You could also call this:

“Money from selling land affected by change can be deducted if not already counted as income”

When you make money from selling land that has been affected by a change, and this money isn’t counted as income under any other part of the law, you can get a deduction. This deduction is in addition to any other deductions you’re allowed.

The most you can deduct is either $1,000 or an amount worked out using a special formula, whichever is more. But you can’t deduct more than the profit you made from selling the land.

The formula to work out your deduction is: 10% of your profit multiplied by the number of years you owned the land (up to 10 years).

For example, if you owned the land for 5 years and made a $20,000 profit, your deduction would be: 10% of $20,000 = $2,000, then $2,000 x 5 years = $10,000.

Remember, ‘profit’ here means how much money you got from selling the land minus how much the land cost you to buy.

This deduction is allowed under the general permission in the law, but the general limitations still apply.

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Next up: DB 29: Apportionment when land acquired with other property

or “How to calculate land cost when bought with other property”
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Part D Deductions
Specific rules for expenditure types

DB 28Amount from land affected by change and not already in income

  1. This section applies when a person derives income under section CB 14 (Disposal: amount from land affected by change and not already in income) that is not their income under any other provision of this Act.

  2. The person is allowed—

  3. a deduction allowed under any other provision of this Act; and
    1. a deduction to the extent described in subsection (3).

      1. The maximum amount of the deduction is the greater of $1,000 and an amount calculated using the formula in subsection (4). However, the amount must not be more than the profit obtained from the disposal of the land.

      2. The formula is—

        percentage of profit × years.

        Where:

        • In the formula,—

        • percentage of profit is 10% of the profit on the disposal of the land:
          1. years is the number, up to and including 10, of consecutive years between the date on which the person acquired the land and the date on which they disposed of it, with the first year starting on the date on which the person acquired the land.

            1. In this section, profit means the excess of the amount derived over the cost of the land.

            2. This section supplements the general permission. The general limitations still apply.

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