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1st development

Discussion in 'Development' started by Moe, 3rd Oct, 2015.

  1. Moe

    Moe Member

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    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
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    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.
     
    Terry_w and York like this.
  3. Moe

    Moe Member

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    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?
     
  4. Be Developer

    Be Developer Property Developer Business Member

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    @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?
     
  5. Moe

    Moe Member

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    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.
     
  6. York

    York Finance Broker Business Member

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    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/
     
    Leo2413 and Be Developer like this.
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    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....
     
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  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Be Developer likes this.
  9. Moe

    Moe Member

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    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.
     
  10. MTR

    MTR Well-Known Member Premium Member

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    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:)
     
    Last edited: 4th Oct, 2015
  11. Be Developer

    Be Developer Property Developer Business Member

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    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!
     
    wylie likes this.
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.