Arthur is a property developer and purchased a house on a large block of land. The house

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Question:

Arthur is a property developer and purchased a house on a large block of land. The house was purchased in 2018 for $880,000. Arthur reconfigured the lot into two separate lots in May 2019 and at this time the land was valued at $770,000. He moved the existing house to the left-hand side and then constructed a new house on the right-hand side. The existing house (House 1) sold in January 2020 for $770,000. The new house (House 2) cost $550,000 (GST inclusive) to construct and was sold in February 2020 for $990,000. There were also legal fees associated with the property development of $11,000.

REQUIRED

Explain to Arthur the GST consequences of the sale of House 1 and House 2.

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