Hi DWolfe,

I'm already having problems with my builder, and building hasn't even commenced yet. What I was informed sounds really convenient for someone in my situation, but I don't know how realistic it is (it came from someone in the industry, though).

A problem with the slab, for instance, will not be able to be fixed once it's completed, so "remedying" the situation then will be impossible. And yes, the owner is ultimately responsible, but the builder and their contractors are generally in control of the quality of their work and what they do at the end of the day. Knowing how other people's projects have turned out, from personal observation, that quality is more often than not compromised, so both builder and contractors can finish the job faster, and not better. I've seen newspapers stuffed in places where bricks should have been put, and bricks placed vertically, so less can be used in the construction process, resulting in a very compromised end result, and thin walls!

I was just asking whether what I was told is done and followed by those "on the inside", who are all too aware of industry practices.

Have taken all of your comments on board, so thank you all for that. I think a one-on-one meeting with a council planner/officer looking after our application will be the way to go, as they keep contradicting their requirements with us. I.e. If we move one of the houses, then we'll satisfy A, B & C requirement, but not D & E. But if we move it from X to Y spot, then we'll be fine with E requirement, but not B or A, and D might be compromised, etc. It's an absurd process to be going through, and I'm starting to pull my hair out!

Thanks for everyone's advice, though

Hi Andrew,

That's an absurd story! I thought our situation was bad, but there's always someone out there slightly worse off than you think you are.

I wonder why councils are so difficult? Considering people are actually doing them a good deed – creating multiple lots and doubling, tripling, etc. the council rates they get from what was once one block of land. I'm all for following rules and having certain standards for new buildings, but mostly I think it's over-regulating just so they can keep their comfy jobs going!

It's a painfully slow process to build a new property, and while I'd like to do it again, I shudder at the thought I'll have to repeat this. It all depends on the council, yes, but the process itself is harder than what it should be. Probably best thing one should be on the lookout for are reno projects or vacant land with already approved plans.

Might post an update in the future… if we come out of this in tact.

Thanks for all the replies.

Hi Tracey B,

Thanks for your input as well. You're right with what you've said, but the contract's already been signed (unfortunately for us now). I suspect it's more the individual we're dealing with rather than the actual company he's working for, but I'm also trying to deal with council members directly, and not just take the builder's word for it. They seem to have a problem with the concept of returning people's phone calls, though. Very, very difficult to deal with!

The actual application has been with council for 6 weeks now, 2 of which were spent trying to iron out the issues they have with our proposal. No one from council seems to want to speed things up. I think some people there only work on a casual or part-time basis, making things like this very difficult for your average developer.

The delays are because of council. First they said this, then they're saying that. What they're saying now is not what they brought up previously, etc. Bit of a mess unfortunately. Other reason for the delays is the builder keeps changing the plans to suit them, and we're not happy.

Anyone willing to share their experiences?

The ATO rep I spoke to told me to be careful which order I do things in. I'm not sure why, as he didn't elaborate further, but I was left with the impression that that will have an impact on how my tax is determined – whether it's a property development business "event" I'm doing, or just with the intention to build and rent it out.

I was told the cost base of it all would be valued from the time the PPOR was purchased. This means they'll backdate the valuation to the purchase date, halve it, and find out how much half of the land is worth (the one where the IP will be built). Only the portion of the land used for the construction of the PPOR will be CGT exempt. Might have to go for a Private ruling, after all.

Thanks, Terryw.

Thanks Terryw! Very much appreciated.

Terryw, thanks for the info! You've given me a different way of looking at this.

From a loan point of view, though, I personally thought it'd be safer to just offer the IP as security on the loan and keep the PPR separate (not mortgaged), as it's already paid off to begin with (it's not just a vacant block of land, there is a property there at the moment). I guess getting one loan for the PPR and one loan for the IP keeps things simple and clean, but why risk the PPR by mortgaging it and putting it as security on a loan?

Thanks again!

Duckster,

Yes, the intention is to pay off the entire loan (both for the IP and PPR) by selling the IP only and keeping the PPR. The PPR on the land at the moment is fully paid off, and we don't intend on obtaining a loan for that house only, separate to the IP.

It's still not clear to me, after having paid off the loan (which will be secured against the IP only), how I'll have access to enough funds for CGT purposes. Or at least sufficient to call this a profitable exercise. So the funds from the IP sale, on paper, will be more than what will be left, as the PPR part of the loan will also be paid off.

I know the PPR part of the loan is not tax deductible, but with one property on one loan, the bank will want its full amount back upon IP sale.

That's my main concern!