Building a duplex with parents - best option to minimise tax

(First post - not sure whether this is under the correct forum category, but here goes.)

My parents have owned a vacant block of land in NSW since 2010, and now wish to build a duplex and subdivide upon completion. They have generously offered to undertake this project with me. Their intention is to have one property remain in their name, while the other is transferred to me.

I would appreciate some advice on how best to approach this development and the transfer of title.

The current estimated market value for the land is $880,000. Realistically once built upon and subdivided, each property would be worth over $1 million.

My understanding is that since the vacant land is not their primary place of residence, a transfer in ownership title would attract both CGT and stamp duty.

Am I correct in assuming that it would be best to transfer interest in the current property rather than waiting for construction and subdivision?

If my mother (who is currently not employed), transfers her share of the land to me, would it be reasonable to assume that both the CGT and stamp duty would be calculated on 50% of the market value (i.e. $440,000)?

Would I then, as a first home buyer, be entitled to a stamp duty exemption, considering the current market value is less than $600,000? Would there be any possibility for me to access the First Home Owner grant for the new build? The build cost for the duplex is most likely to be over the $750,000 threshold, which makes me think this is unlikely.

Am I on the right track or have I completely missed the mark?

 

Do they have a main residence?

If you mum transfers the land she would trigger CGT based on the value less the costbase.
You would be up for stamp duty on the market value.

 

Hi Terry,

Yes, they currently live in their family home (separate property).

As a joint tenant, I was under the impression that it was possible for her to transfer just her interest in the land? Or is this not the case?

 

If a joint tenant will need to sever it to tenants in common and then her share can be transferred.

 

Am I looking at this the right way? Would this be the best option for minimising costs in relation to this sort of development?

 

I have no idea, but it is something to get advice on. That was an answer to the question about whether it was possible for a joint tenant to transfer their interest in a property

 

Hi Terry, would it be best to approach an accountant or a lawyer such as yourself for this sort of advice?

 

maybe both. You could need stamp duty advice which only lawyers can give CGT advice which either could give, but may want to run some numbers which accountants might do but not lawyers.

But there are many side legal issues to consider such as risk, estate planning, claims, falling out etc.

 

Hi Terry,
Would you be available to discuss this further?

 

If you are willing to pay, send me an email.

 

Yes, I am interested in proceeding further with this.
I tried to email you last week (30 July) but never received a response (perhaps it was lost in your junk folder). I've just resent.