Hi All We have just started the process of our first development. We are at the stage of architectural drawings finalized, and ready for submission. There are 6 townhouses to be built with the existing home to be demolished. Weighing up our options on what structure the properties should be set up for ownership? Cheers
Heya So you've done prep for submission but haven't bought the block yet? If you have bought the block then your ownership question is already answered.
Already purchased in wife's name, Can the townhouses be set up as a business entity, or can they be transferred to a smsf etc?
@Moe May be too late to setup Structure! Not sure if you checked contract of sale for Margin scheme or not? Where is proposed development?
May be too late to setup Structure! Not sure if you checked contract of sale for Margin scheme or not? Not sure what this means. Where is proposed development? Newcastle.
The replies above are referring to the fact that you have already bought the property. That means the ownership structure has already been decided. It's owned by your wife. Any change of ownership now will incur the usual transfer fees and duties. Be Developer means to check the Contract of Sale to see if you are eligible to apply for the Margin Scheme which relates to GST on property. You can learn more about this here: https://www.ato.gov.au/Business/Bui...Goods-and-services-tax-(GST)---margin-scheme/
Too late to change ownership, without duty. Sounds like your wife will have a high income and you have missed the tax planning. You do know about gst and how profit will be taxed and when deductions are claimed, record keeping etc ? Seems like that may cost you. A smsf cant generally acquire from her. As bedev says the margin scheme may add to profit and would be something your lender WILL need to clarify. Normally something i discuss before a contract is signed. Oh dear....
I wrote a legal tip about this last week Legal Tip 80: Plan Structures Early https://propertychat.com.au/community/threads/legal-tip-80-plan-structures-early.4372/ Better late than never. There are still opportunities to structure things without changing ownership or triggering duty etc - to a certain extent.
Thanks Terry for the positive feedback and advice. The property was originally purchased for a second dwelling to be built but a rezoning has come to light hence the 6 townhouses.
Perhaps too late as mentioned this time. However if you plan to continue developing you may want to set up a Family Trust, this is what our accountant has recommended. We purchase land in our trust and this way we can distribute profits. We use margin scheme and pay GST of course. Its extremely important to speak to a professional we have saved money by getting the structures right. MTR
As @Paul@PFI ,@Terry_w and @MTR Said, best to get professional advise and transfer the land to right entity. Tax liability may be $100 (for argument sake) now, but changing to right structure may save you $100k+ on entire project. Speak to your accountant/structure advisor or get in touch with professionals who already replied to your post!
I wouldn't say it is too late and I wouldn't necessarily suggest a transfer of land is worth it. It may be, but maybe not. But there are things you can do, with the ownership as is, and save tax. It will all depend on the circumstances.
