QLD Calculating approx profit - subdivide, knockdown and rebuild.

Feedback welcome on this:

Firstly, I will say upfront, I am by no means an expert on this.

I have been provided with quotes for subdividing and knockdown. I have applied these with my calculations on what the possible profit would be.

I have discussed with a couple of builders and agents. Some agree, some don't. I'd like to get feedback from the Propertychat community.

If I was a developer/builder:

Buy land (Eight Mile Plains, Brisbane): $925,000
Demolish house and Pool : $20,000 (quoted)
DA and Subdivision works into 2 blocks: $78,000 (quoted)
Build 2 houses (2 storey): $700,000
Total: $1,723,000

Sell 2 houses: $2,200,000
Profit before tax: $477,000
If CGT 26% (2020/21): $124,020
Profit after tax $352,980
Profit percentage 20%

* no ATO discount or any cost base deductions applied.

 

GST? Holding costs? Selling fees?

 

Cheers. If I find out more on these and factor these in, would that be all I would need to work out approx profit (If sale price eventuates)? I also assume more profit when calculating CGT.

 

I haven't been through the process myself @Smee, but those few stood out as gaps to me. Contingency would be the other one.

Build price looks tight to me for a turn key property (incl landscaping etc), but I assume you have spoken to some builders and have pricing for similar standard of homes that are selling for your expected sale price in the area?

Speaking with an accountant before you progress too far down the track would be a really good idea. GST and your assumptions around CGT discount could make a BIG difference to your projected profit even without any other unexpected costs cropping up.

Good luck.

 

CGT ??? Maybe not. Developing and sale will involve GST and not CGT as its a profit making intention. Fully tax on profits (ex GST numbers) at marginal tax rate of the owner or entity etc. If a company etc is used then full and final tax must also be addressed as the company rate may not be final

Sales would be 1/11th GST but possible to use the margin scheme maybe and also claim GST on costs. Profit is fully taxable. No discounts as its not a CGT asset.

 

Cheers. Very helpful. I've had a quick scan of the toolkit and it has some great info. I'll read in full tonight. Thanks again.