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Anybody reconfigured a block? How do I work out what capital gains tax I would pay?

Discussion in 'Development' started by wylie, 18th Sep, 2015.

  1. wylie

    wylie Moderator Staff Member

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    I think I may have a few questions coming up to help us decide whether to build or sell if we get our DA through.

    I'm trying to work the figures for build or sell, but don't know how to do it.

    We have two blocks together, each worth probably $900K. We were recently offered $1.8M for them, so let's say $900K each is about right.

    Our plan is to keep each house on its own 375sqm (thereabouts) block and create a middle block of about 1000sqm.

    Current UCV for the 900sqm blocks is about $550K each.

    I'm guessing UCV for the two newly created small blocks of 375sqm may be about $400K each.

    Guessing the 1000sqm block in the middle is likely to come in at about $600K.

    If we decide to sell one of the houses, we paid for a 900 sqm block and a house. We would be selling the same house on a block less than half the size. How (and who) works out what we would pay in capital gains tax when we are talking apples and oranges. What we are selling is very different to what it started as.

    We are selling something that is less than half of what we paid for.
     
  2. wylie

    wylie Moderator Staff Member

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    Second quick question is how much it costs to actually reconfigure and create titles so that we would have three separate blocks, ready to sell one or more if we wanted to?

    I have a printout from BCC but I'm confused by how much gets me to what stage?

    Ballpark figure is all I need.
     
  3. willair

    willair Well-Known Member Premium Member

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    Just wondering ,are the titles already split?,or are the still that size on the title?,that would be a big cost factor for a start,that's what i like about the old yellow paper titles they show upfront split 2-3 ways,or all on one title,but question to be asked is ,"IF" someone offered you 1.8 mill upfront with a 42 day ect cash no inbetweens settlement ,then what do they intend to build and is there a "DA" in place on your properties?,from the end tax area i would rather employ someone pay the fee and know upfront the total walkaway costs,but 1.8 million can make calm waters vanish completely and retire..imho..
     
  4. wylie

    wylie Moderator Staff Member

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    Thanks willair. The DA will be through in about four to eight weeks (assuming it is approved). The blocks are two separate titles and we are wanting to reconfigure two large blocks into two tiny ones and a big middle plot with a DA.

    I've removed some of my answer, because I think I'm just muddying the waters with too much detail.

    What I am looking for is how much would it cost to reconfigure two blocks into three.

    I'm very happy to pay for good advice, but just don't know who I need to speak with... ATO, OSR or someone else?

    If I can find out how much to split off one house, split off the other house, and how selling one of them is treated regarding CGT, I can continue with my numbers to work out which is the way we head.

    In one way, we have too many options and the path forward is not clear.
     
    Last edited: 18th Sep, 2015
  5. wylie

    wylie Moderator Staff Member

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    Again, I've removed the waffle as it is just confusing for me, so goodness knows how anybody else can make sense of it.

    I'm trying to cost out the various options, but just don't know how the gain will be worked when the land under the house to be sold is less than half what it used to be.
     
    Last edited: 18th Sep, 2015
  6. Bran

    Bran Well-Known Member

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    Holy moly. No idea. Good luck!
     
  7. Leo2413

    Leo2413 Well-Known Member Premium Member

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    town planner, surveyor.

    I'm assuming this is in Brisbane.

    http://www.yourinvestmentpropertyma...elopment/subdividing-for-a-profit-140993.aspx

    http://consultplanning.com.au/residential-subdivision-qld/

    Roughly from 1 into 2:
    - $30-40k in infrastructure charges
    - $10-15k in consultants, including surveyor, town planner, basic engineering and a council application fee
    - $10-15k for a new sewer and water connection, if they are right in front of your property and easy to access. Can go up from there.
    - $5k-15k for other civil items,
    - $1-3k for legal costs
    - $5-20k for clearing and fences.
    - $20k contingency.
     
    Last edited: 19th Sep, 2015
  8. wylie

    wylie Moderator Staff Member

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    Thanks Leo. I've sent an email to our town planner, but was hoping to do some figures this weekend. Thanks for those links. I'm about to read them now, but thought I'd answer first.

    Our DA is two into three. I have a friend who has said ballpark $75K (one block split into two). I'm unsure if I'm up for that fee times two because we have two houses, both needing to be moved onto small lots, leaving a big block in the middle.

    Or, as it is all rolled into one DA (two stages), whether the fee will be a one off $75K (or thereabouts) for the reconfigure?

    As part of the DA, we have paid surveyor, town planner, engineering, BCC fee, building designer, landscape plan, acoustic report, etc. The idea was to get all the ducks lined up in the hope it gets through without having to go back and forth. So we did them first.

    My dilemma is we've been approached by a developer who wants the (if approved) DA block plus one house. I'm not sure how much that saves us by not having to lift and shift that house, not having to pay the headworks for the townhouses?

    Until I get a good idea of what we are up for, I cannot work out whether we should grab the money and run, or go ahead and keep paying fees and costs and do the build.

    I feel quite overwhelmed, not knowing what I don't know. I cannot help but think if I'm this clueless at this stage, how much we could get wrong as we move forward :eek:.
     
  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    [QUOTEwylie, post: 66694, member: 76"]

    Or, as it is all rolled into one DA (two stages), whether the fee will be a one off $75K (or thereabouts) for the reconfigure? I don't think the fee will be double but I'd assume would be more than the 75k, depending what works need to be done to each block. Town planner and surveyor should be able to help you tighten up the costs.

    As part of the DA, we have paid surveyor, town planner, engineering, BCC fee, building designer, landscape plan, acoustic report, etc. The idea was to get all the ducks lined up in the hope it gets through without having to go back and forth. So we did them first. So your awaiting on DA (which i'm assuming is for 3 blocks), but you don't want to go ahead with the subdivisions and construct if the subdivision costs is too significant. Am I getting it right? In which case you will sell the land with DA and let the developer subdivide and build?

    My dilemma is we've been approached by a developer who wants the (if approved) DA block plus one house. I'm not sure how much that saves us by not having to lift and shift that house, not having to pay the headworks for the townhouses? Sorry haven't moved a house before so no idea but it's reasonable to assume it would save you some cost..unless the house is in good saleable shape and could be sold?

    Until I get a good idea of what we are up for, I cannot work out whether we should grab the money and run, or go ahead and keep paying fees and costs and do the build.
    It really depends on the feasibility to see what kind of profit return your looking at and also if you actually have the finance to see the project to the back end? I would assume the project is profitable as you have interest from a developer. I would do a feasibility to see what kind of %age return there is and also see if you have the funds for the project.

    I feel quite overwhelmed, not knowing what I don't know. I cannot help but think if I'm this clueless at this stage, how much we could get wrong as we move forward :eek:.[/QUOTE

    I feel like this on every development. Its normal I think. :) I think the most important thing is to get your feasibility as right as possible in terms of costs and end sale value.
     
    Last edited: 19th Sep, 2015
  10. RPI

    RPI Property Lawyer, Town Planner Business Member

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    The rear lot nature of this block will add some costs. You will have to have a concrete driveway to the main part of the lot along with water, sewerage, electricity, phone and NBN conduit.
     
    Last edited by a moderator: 21st Sep, 2015
  11. wylie

    wylie Moderator Staff Member

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    I just read those pages, thanks Leo. They were quite helpful. I also had an email reply from the town planner and he has undertaken to sit down with us if we get the approval and run through the likely costs we will be up for.

    We are probably two to three months from getting an answer, so I'll keep researching in the meantime.
     
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