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Thanks for that but the feasibility when operating under a company entity registered for GST makes it much more feasible tax wise than doing it in your personal name. I realise that I could do a joint venture with myself and my company but the profitability would considerably reduced as I would be taxed at the highest tax bracket of 47% as supposed to 30% and I would not be able to apply the GST Margin scheme which enables you to only pay GST on the margin of property cost price and final selling price which saves you a large amount of money. I do agree that the feasibility needs to be worked out ex tax to check its worth doing in the first place but you need to do some tax planning or you will be giving away much more than you should. And its way to hard to make to give it away again.
Hi v8ghia
Thank you for your reply. I realise that some of the exit fees are not to serious but the problem is not so much the exit fees its that they will not do the loan to my company, as it is pretty obvious that its a development company when they look at financials so they are shying away. I have even added guarantors with PAYG earnings to remove any concern of serviceability but still not coming to the party. They will lend to me in a personal capacity but then I lose the margin scheme for GST on the land purchase and get hit with CGT and higher income tax as supposed to 30% CT which makes the project unfeasible. If I was going to develop and hold this wouldn't be such a problem.
Thank you everyone who replied with ideas I will work something out eventually, you know what they say if it was easy everyone would be doing it.
heers
Hi Richard
I think I better clarify. I am not turning down the option to use a commercial product and pay the extra interest or fees, so sorry if that's what it sounded like in my post that's just the cost of doing business and I am fine with that. The issue is that the lenders are not offering it to me because of the size of the project. (2 lot subdivision). I am also being completely up front with exactly what I want to do as it's not that hard for them to work out anyway, and with the way sales contracts work in NSW you cannot write in a finance clause so your finance needs to be pre approved before exchanging contracts, you cannot risk trying to pull the wool over the lenders eyes or they will leave you high and dry with an unconditional contract when it comes to completion. Can you possibly let me in on who is currently lending in the current climate for this type of project or what product would be best for this size project ? Any help would be gratefully received.
