Hi Guys,I have a triplex block in Perth 6 km from the CBD, with two tired 70's 3 Bedroom 1 bathroom duplex on, brought 17 months ago 100% finance but can pay out the loan any time. I am thinking of demolishing and building three two story 4X2 houses on the land.Current return is total $750/wk with approximately $1500/wk total(?)anticipated on the 3 new builds.I brought the property in my name for the negative gearing,so if I build 3 and sell two(or three) what sort of tax hit can I expect to take, I calculate around 350k return prior to tax and selling fees.I am looking at forming a company to to do the development but am not fully informed if this will be of benefit to me as the land portion is in my name anyway. Can anyone recommend a good property wise accountant in Perth, and has anyone out there done this before that can give some advice. Cheers.
Hi,
Get the structure right, now, if you can. If you sell you will be up for GST but please check this with a VERY good accountant. If you are going to hold them you may be ok but building and having three new properties in your own name leaves you exposed. If there is a ripper profit to be had it may be worth biting the bullet and getting the property transferred into a new entity. Please get very good advice (sorry don't know in WA)
As far as the development part goes, it is worth it doing!
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeHi iball,
Sounds like a pretty great profit you would make.
I understand that you may want to crystallise the price now.
Dwolfe is correct – after the rebuild you will be selling 'new residential properties' so you will have GST on the sale price. You need to take this into consideration.
In terms of the structure, maybe a trust with a corporate trustee would be a good way to mitigate some of your risk relating to the mini-development – however to make the transfer happen (i.e. from your name to the trust) you will need to incur stamp duty on the transfer.
I believe you need some good advice from an appropriate qualified accountant. They can help you plan and work out the best way to protect yourself while giving you some advice on minimising the tax liabilities.
CGT can be planned for and work with – provided you get advice in advance.
And remember – if you are paying some tax, then it means you are making money!
Good luck with everything
EvolveGrow SMSF | Grow SMSF
https://growsmsf.com.au
Email Me | Phone MeSelf-Managed Super Fund (SMSF) Specialist Accountants
Thanks DW and Evolve
Will arrange to talk to my accountant this week and see if she feels confidant enough to advise on the best strategy,or refer me on to some one else with the knowledge. Not all neighbourhood accountants want to specialise in property, unlike some of us with the bug who are trying to make a little luck for ourselves.
Still open to more advice or tales good and bad if anyone wants to contribute.Cheers…iball
When you say you can pay out the loan at any time does this mean you have the cash to do so or there are no exit penalties.
There is a big difference.
If it is the later i would query how you intend to finance the construction as i think you may have a wee problem here.
Richard Taylor | Australia's leading private lender
Offset accounts have enough to pay out loan or pay for construction,will still have the original loan if I use my own money,but will be CF+ if I go this route.Selling can free up the $ to do it again somewhere else maybe on larger scale with less debt.Westpac loan, no exit penalties, had the same deal going for my last 6 buys…Cheers iball
These guys are awesome:
http://www.mckinleyplowman.com.au/
The best thing is that they know all about the property action you speak of.
Regards
RyanRHP
Thanks I'll give them a call..Cheers
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