Cashwalton,

It seems from your posts that you intend to act as "project manager" for your project – and this is a good way to save money – but also means you need to know what you are doing.

In order to know what you are doing you need not understand every detail of every part of the project, but you must understand the process so that you don't get in your own way! I suggest generating a project plan and then assessing exactly what you will personally attend to within the project plan, this should also help to avoid over-committing and potentially slowing down your own project.

The best way to understand the process is to devise a project plan and timeline so that you can monitor progress and ensure that each step is completed in due course. You are also talking about a relatively large amount of cash for which you are ultimately responsible, and again, the project plan is your key to staying on or close to budget.

Plenty can be done with a 10m wide allotment!

Get in touch with a planner or architect and assess your options.
Ryan seems to know his stuff, maybe he can help?

Hi Cath,

Good luck with your search for the property that's right for you. I have heard good and bad about buyer's agents, and would suggest that regardless of whether you use one or not, don't take short cuts on doing your own research to establish what you want and where you want it. This will ultimately make the job easier.

I sourced several properties for a buyer last year and the process was made much simpler by having a clearly defined brief. This meant I was able to find the right properties in the right locations for the right price.

The heritage overlay probably affects the value in two ways: 1, It protects the local character, and so increases the value of the property, but 2, it also means the pool of potential purchasers is smaller because they have concerns just like those you have raised!

Just because there's a heritage overlay doesn't mean you can't extend or otherwise change the property – it just requires a TPP to do so.

There's unlikely to be contamination issues that haven't been addressed in the planning or building process assuming the warehouse shells are being sold for residential purposes.

Same could be said of the title issues, but the BC could have considerable maintenance costs to deal with.

Building a house "on top" would mean you would need to "own" the property in title. You can determine this by having a look at the strata boundaries on the plan of sub-division.

As for crime…West Melbourne ain't what it used to be!

Good luck.

There's nothing wrong with shopping a few quotes. There are different types of valuations, the most common (and the most expensive) is a valuation for mortgage purposes – this is what a bank relies on.

I'm not an accountant, however I have done this myself and found it's rarely that simple, but all else equal you should pay CGT on the value of the land at the time of sale. The value of the land should be determined as "fair market value" for land of that size in that area.

Aspiring Developer,

As others have already mentioned, the category of "property developer" is a trigger for your banker to increase shading because of the perceived risks involved in the field. They're all just terms – semantics I guess – but "investor" seems to strike a more positive note than "speculator" or "developer" right now! This, of course, may change in the future.

My recent personal experience has shown me that it's a good idea to go into discussions with the bank as an investor. In order to do this convincingly, investment needs to be your primary objective. I also believe that separating development and investment is good business planning. This can be done by underwriting your own developments as an investor. In doing so you should perhaps be transparent with your lender. It can work like this:

Your development entity purchases the property with the intention of developing for a profit. This is nothing more or less than a business proposition (that your lender will probably see as high risk) and requires a business plan.

In offsetting some of the perceived risk, you (or your investment entity) agrees to underwrite the development by buying all or part of the finished product. In this way, you can use your equity in other investments to help secure the proposed purchases and in doing so provide pre-sales that will diminish the risk for your development entity.

This should mean that you do not secure the development project directly to your investments. This is good for you, and good for the financier. The development proposal should stand up on its own, as should the investment proposition.

Thanks for the heads up!

Hi Sinkers,

I am certainly not a tax expert or accountant so I can only speak from my own personal experience. It's my understanding that the basics of what you are proposing is that you will be creating two properties (and titles) from what was once one title.

With this in mind, there needs to be a value ascribed to the land both before and after sub-division. This is important later. It seems you are proposing to develop two new dwellings, and sell both – although you intend to live in one for a year. If your intention is to retain one of the properties as your PPOR then this should remain CGT exempt.

The structuring then becomes important. Thinking in entity terms, you are proposing to sell half of the land and keep the other half. Theoretically, half of the land can be sold in accordance with the proposed plan of sub-division and contingent upon the registration of the sub-division.

So I would suggest you need to be clear about the intentions, and thus your strategy, and then seek property accounting advice to ensure your intentions are satisfied. If you are sub-dividing and selling for profit then the ATO would probably determine you are not investing but actually trading – you are a business. This then means there are also GST issues to contend with, along with reporting requirements. There are well established benchmarks for this and I have also found lots of useful advice on the ATO web-site.

What you are proposing is not particularly unusual or complex, but it is worthy of full consideration and quality tax advice.

Good luck with your project.