What makes someone a property developer,as opposed to an investor?
I am wondering if you need to be building/ developing a certain amount of prop’s to be considered one?
Then,as a “developer”, can that become your registered business?? (that i then assume could enjoy all the tax benefits??)
Then,if so,is it more benificial to register for gst?? (as a developer)
& lastly, would it be best to be buiding,as a registered property developer as a company, rather than in your own name?
Too many questions? Sorry!Wow Misty…So many questions !!!!
I would think that if you have a full time job, that is your primary occupation.
If you buy investment property, build houses, subdivide land, or whatever, thats all incidental.
Whether you structure these activities via a company or a trust, that again is only to get the best asset protection and tax relief from structuring.All within your rights..
Are you concerned that the ATO will come knocking on yr door and declare you a developer, or an investor ? There are no penalties for engaging in these activities….
I think its the other way around, ie.. you declare to them that you are a developer, or a full time property investor for some taxation benefit, and they will come to you asking you to substantiate the claim..
If you are going to turn over more that $50k in cashflow, and do many developments, then sure, register for the GST. If its only a couple a year, I would say don’t bother. Many investors do this now without consequence.
As far as using a company or your individual name, it all depends on the taxation implication.
Probably preferable to structure your property investing via a structure as recommended on this forum.
If you are developing property, then you are by definition, a developer. You don’t need to register as one, or call yourslf one,and it doesn’t have to be your only occupation.
Finally, if your activities put you in the position of the possibility of being sued, then more likely its better to not go in your individual name…Cheers….KP
I think there is some confusion about the tax benefits to developers. The only tax implication I can think of is that by registering for GST you will need to hand over 1/11 of your profit as GST… which is why the ATO would be very happy to decare you a developer. It may also have some impact as to whether you are assessed under CGT or as income – and you certainly would like to be assessed under CGT. However if it is your clear intention to just develop a property and sell it and you do this regularly, then I would say that yes this is an income activity not a CGT activity; but you need to speak to a tax accountant I would think.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
cheers! great advice/info. As you commented,too many qu’s! But i figure too many is better than none,& jumping in uneducated![biggrin] That’s why i love this forum.Gives me some great info to then take to my accountant for clarification. Thanx.
John is bang in his response.
One of the priviledges of being classified as a property developer is i can hand of 11th of the difference between my purchase price and my sale price over as GST (assuming i am using the margin scheme).
I guess i have the massive benefit of being able to invest the imput credits along the way (big deal).
Doing the odd investment deal here and there and keeping my job as a postie or nurse has its benefits.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Misty1,
You can run a property development business for a whole lot of reasons… but for sure it is a business that you would take on with that level of seriousness and care.
If you’re an “investor” you can become involved in a development project, but if you continue in development you will have to make it a business. You’d then need to consider the proper structuring, management, accounting, tax, etc.
The whole point about getting the structure right is to properly protect yourself, and maximise the project revenue (viz tax, etc).
Peter.
—
Peter Comben
http://www.smartpropertydevelopment.com.au
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