When is a subdivision considered to be a taxable activity?

If you subdivide and then sell off part of your existing section, you only need to pay tax in certain circumstances. Generally, you do not need to pay tax if all of the following apply-

1. You do not have a pattern of buying and selling properties.
2. You did not buy the undivided section with an intention of selling part or all of the property
3. The bright-line property rule does not apply to the sale.

If you buy a property intending to subdivide and sell of some or all of the sections, the profit from the sale of those sections is taxable.