Hi Guys, happy new year! Build First or Subdivision First?
I know this answer depends on different cases, but I still need you guys help to firgure out which way is less cost or more efficient.
Here is the case:
my father and I purchased an vacant land in Victoria within Monash Council, around 730 sq meter. My name and My father’s name on the land title. Here this land for lived in or investment purpose, and we plan to subdivide into two lot and build two new townhouse on it. So here we say we choose battle axe subdivision as the frontage is around 17 meters.(one townhouse in the front, one in the back.)
Method.1.
Normally, people or my friends do like this way, first ask architect to do the drawings and obtain the planning permit from council, (it take around 4-6 months or 9 months), once the planning permit approved, then build it, and do the subdivision by land surveyor around brickwork time, and this takes about another 4-6 months, but you build works still going in this 4-6 months.
so, problem is, the end of subdivision will become unit 1 (my name and my father’s name), and unit 2 (my name and my father’s name), therefore if my father live in unit 1, and I live in unit 2, and we sell it say after 1 year, here is the pros and cons:
pros:
construction and subdivision can do in the same time, which same time for interest payment
cons:
we cannot claim full tax free on Capital Gain tax.
—————————————————————————————————————————————–
Method.2.
same as above but at the end of the subdivision, put my father’s name in unit 1, and my name in unit 2, but if we doing this, we have to pay stamp duty for the building, say the building cost is around $800,000, divide by 2, $400,000, times 5%, we have to pay around $20,000 each, so total stamp duty would be $40,000
pros:
construction and subdivision can do in the same time, which same time for interest payment
we can claim full tax free on Capital Gain tax if we live in and sell after years.
cons:
stamp duty fee around $40,000
—————————————————————————————————————————————–
Method.3.
after the settlement of the land, we simply subdivide the land into two lots, as I know, if I doing this with Monash Council, I need to pay around $5000 for each as a bond until the subdivision is finish, which take around 4-6monts. Once the subdivision has been done, we can put my father’s name in unit 1, and put my name in unit 2, then we can build respectively, so two buidling contract, two construction loan, etc. (but I am not sure could we build while the subdivision waiting time or we have to wait till the approval of the subdivision).
pros:
we can claim full tax free on Capital Gain tax if we live in and sell after years.
no stamp duty on construction
cons:
(not sure this is right) we lose 6 month time to waiting for subdivision approval, so we have to pay interest during the waiting time.
then build, so the total finish time would be 6 month more than method 1 and 2.
——————————————————————————————————————————————
Alright, guys, I know this is very complex, and I hope someone could help me to figure it out which way is more effective and saving cost, we all know we have to make money on property investment or development, some of the method I mentioned above might be wrong, such as council approval time, stamp duty % or other things I have not covered as my current knowledge, so please help, give the best solutions!
Hope you guys found this case interest, this is my real live case, cheers!
Thanks so much for your reply, ok. We make it short, say you purchased an land can subdivide in two lot to build two townhouses, will you subdivide the land first or build it first (having the planning permit and stuff to build),then subdivide around brick time.
if you subdivide first, how long it will be take to approval roughly,and during the mean time, can u build? Or have to wait till approval.
What are the pros and cons
This reply was modified 8 years, 9 months ago by Mickeymouse.
Firstly are you able to sub-divide before building? Your question above should be addressed to a town planner, but in the first post you appeared to mention transfer of titles. This has implications which should be put to a lawyer.
Thanks so much for keep reply on me, it seems more and more interesting.
First of all, we say we could sub-divide before building (within monash council), if in this case, can we build while we sud dividing the land, or we have to wait for approval for subdivision then build? I know this is a town planner question, but if someone has experiences regarding this, it is good to share.
with the title, I just looking for someone could share the similar experiences.
Viewing 9 posts - 1 through 9 (of 9 total)
You must be logged in to reply to this topic. If you don't have an account, you can register here.