Hi Guys,
I would just like to apologise in advance if this topic has been asked/addressed in previous posts.
Around late 2007 my fiance and I bought our first block of land in Kellyville Ridge NSW. We held onto the block for about 1 year while getting finances, plans and the DA and about 1 month ago we stated building. My dad is the builder and we are predicting the project competition date to be around the end of this year or early next year.
Our target expendature is approximately 500k (house and land) and houses of the same profile (i.e. Land size, Location, House size, etc) are going for about 700k. We plan to live in the house for the first 12 months and then sell it and buy a smaller more affordable house so we can start a family.
I've been reading a lot about people setting up Trust funds to minimise their tax and to protect their assets. I would just like to know if this would be a viable option for my current situation. Its all so confusing.
I would also like to know if i should I keep the house? or should I sell? I was thinking of selling the house and buying an old house on a large block of land. Then subdividing to build a house on a battle-axe block behind.
Any advice would be greatly appreciated.
Cheers,
Newbie
While each and every person has a different situation, if you are going to sell a house that is your primary place of residence (PPOR) then you will not pay any capital gains tax on the sale, subject to a few criteria. No trusts required for that step, however if you're going to keep it, that's another matter. You have many many variables here.
It also depends on how much debt you're going to be carrying into the future, and it's tax status.
Finally, when working out if you should be selling or keeping, I usually run the ruler of it this way – if you were looking at the property that you have, and work out what it's worth to you, would you in another situation buy something similar and see it as good value? It's easier to do it with shares, but the same idea works here. So many people say they will sell an asset when it goes up in value, however sometimes the money could work a LOT better elsewhere, if only they could view the asset as what it is – a money making asset, not something which they own and are attached to.Hope that helps a little bit!
Thanks for the advice Finspec,
My main concern is being able to make repayments and pay bills comfortably on only one wage and starting a family with my fiance (thus the selling, subdividing and building a house on a battle-axe idea). Otherwise I think my best option would have been to keep the house and use the equity as a deposit to buy an investment property (not sure if I do that but it sounds right hehehe).
The house still has about 5-6 months to finish so hopefully I'll win the lotto by that time or have a better understanding of the Investment property market.
Newbie
If your a first home buyer and you purchase the property in a trust set up im not sure your eligible for the FOG though?
Very simple you wont be eligble for the FHOG if you buy the property in Trust.
Richard Taylor | Australia's leading private lender
Newbie.
For whats its worth, I would be looking at holding, as you stated by the time you have finished the build you will have approx $200,000 equity. You would have to work a lot of hours to make this sort of money "TAX FREE".
Once you have settled into a regular pattern, on one income and a young family, than look at reassesing your position.
On the score of buying a large block and subdividing, my experiences over 30+ years in the real estate industry has shown that battle axe blocks tend to be slower moving and bring lower prices than your average street facing block.
Its only an opinion gained from my own and my clients experiences, I am not in your shoes.Thanks for all the advice guys,
I'm not sure what financial situation i will be in by the time the house is finished but i'm leaning towards keeping the house. Though if my fanances do not improve i'll just have to sell it.
Thanks for the advise on sub-division tony, I figured as much. From what I've heard battle axe blocks are better for renting out rather than selling. From your experience would a Duplex be a better option?
Newbie
Newbie
With regards Duplex or individual dwellings, part of what I do for a major construction company here in Sydney is feasability studies on sites for commercial and residential applications, you need to do your Due Dilllegence and research the site and area.
Thanks Tony,
Looks like i have alot of research to do. Good thing i got a while before the house gets built
Newbie
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