Here's the scenario.
Block of land owned by my wife who purchased it in 2003 for $310k, current value $700k.
My wife's sister and her husband want to spend $700k building two three bedroom t/houses.
At completion my wife and I will have a townhouse and they will have one. All square!!
Questions: Will capital gains tax on the land be realised when we split the two properties?
Will they have to pay stamp duty on the portion of the land that they will be entitled to?
Any better way to do it?
Any advice on the best way to go about this type of deal would be appreciated.Look forward to hearing your thoughts.
Cheers,
Ren
Hi Ren
certainly one for a quality property accountant, not just a general tax accountant
an option maybe to 'sell' the land to an entity or entities to complete the project, maybe with settlement only at completion of dwellings
however as above, get good advice first!This is tricky, you will def need to speak to a accountant and a lawyer to write a “contract for you” even thought it’s family, a written contact wont hurt.
Im going to talk from past experience, so it may NOT apply to your situation- we had a few clients who apply for a loan with a similar situation to yours…there was a few points that should be taken in consideration in term of finance to avoid trouble.
1. banks will only lend for construction on a land that’s mortgage via them – ie they will not be 2nd mortgagee holder! ( unless it’s Bank sa- > st George bank)
2. Banks are cautions about lending money for a land NOT own by you-
There’s a few ways around these problem, depending what you do with the land ie sell half?
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
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