Advertising house and land packages

Discussion in 'Development' started by ellejay, 16th Dec, 2019.

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  1. ellejay

    ellejay Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    2,192
    Location:
    Kimberley and NZ
    I'm subdividing a block of land in regional Vic into two lots. Flat land with services on the block, so straightforward subdivision. The land pp was $170k. Fees for subdivision $20k. Each block owes me say $95k. I've already been offered $120k for one of the blocks, the other has a nice, powered shed so would get a bit more. So only $50k profit all up but I'm doing absolutely nothing (other than holding for a year. Not much money in this but if I do 2 builds for $300k each they are likely to sell for $500k each. So about $200k profit but I want to test the market before using my own money to build.

    How do the developers here advertise H&L packages for sale? How do you manage pre sales process? Any tips?.
     
    Sackie and lixas4 like this.
  2. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,485
    Location:
    Sydney
    Your calcs are wrong. You have disregarded GST. The ATO are your business partner. Dont assume its around 10%.

    Isolated profit making through subdivision = Enterprise.
    Sale of land or new residential premises is a taxable supply
    Consideration is $75K+
    So GST applies. The buyer is the one liable for remitting GST at settlement. A contract which disregards GST will encounter issues prior to settlement.

    Profit also needs to consider
    1. Stamp duty on acquisition
    2. Legals on acquisition and sale
    3. Agent and other selling costs
    4. Council / state sub-div fees ie council contributions etc
    5. Holding costs esp for the build. Interest, rates etc are also non-deductible
     
    ellejay likes this.
  3. ellejay

    ellejay Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    2,192
    Location:
    Kimberley and NZ
    Thanks Paul, this may be my first and last! Let's see how it goes.