Hello All, looking at some advice please.
I have a potential development site in the burbs in Melbourne with a approved DA for 2 townhouses behind a existing house which will also be kept.
Ill be likely to structure the development with a trust. This is the tricky bit, a friend is trying to buy his first house and thought he could help finance the deal by purchasing the front house for him to live in as I might be a tad short for finance, so thought this could be a win-win situation. The site is worth approx $520K and I roughly work out the house subdivided is worth approx $400K
So how can a set this up all correctly, what is the best way for me to do the development while he buys the front house. I hope this makes sense.
Cheers
DM
IF YOUr friend is going to be living in the front house then a trust may not be suitable.
Maybe tenants in common might be better. Your share in your trust and his share in his name. Draw up a deed of partition and then settle. later divide the land into 2 with 1 block owned 100% by each of you. Possibly no stamp duty on the split.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Does he want to buy the front house and live in it or be a potential party to the JV ?
Terry has given you some excellent advice in relation to this so even though he is based in Sydney why don't you engage him to act for you in setting up the structure.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi TerryW and Richard
My friend wants to buy and live in the front house, $400K is all he can afford so he can help me by putting dollars in while I develop the 2x Townhouses at the back. Do u mean to divide the land into 3 as there is 2 Townhouses behind the main front house? This is a new equation for me so just try to get my head around it. Also how much and how long does this sort of structure take to setup.
Many Many thanks for your help.
Cheers
DM
dangermouse99 wrote:Hi TerryW and RichardMy friend wants to buy and live in the front house, $400K is all he can afford so he can help me by putting dollars in while I develop the 2x Townhouses at the back. Do u mean to divide the land into 3 as there is 2 Townhouses behind the main front house? This is a new equation for me so just try to get my head around it. Also how much and how long does this sort of structure take to setup.
Many Many thanks for your help.
Cheers
DM
You basically have to decide how to divy up the land on purchase. Then each party buys in the final percentages. It is is going to be 3 blocks then may 30% 30% 40% depending on a few things.
If you don’t do it properly up front then stamp duty will be payable on subdivision if you change the names on each block from 2 or 3 to 1 name.
You need legal and tax advise on this and then you need general legal advice on structure as well.
It will be a bit complex and will cost you a few thousand, but this may be able to save much more by reducing stamp duty in the future.
You will also need finance advice because if your friend chips in $400k cash but he is on title then he will have to guarantee any loan that you get to buy the land.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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