Hi everyone, Currently looking into developing one of our investment properties, and looking for some help around what the best way is to structure everything, to minimise tax. Background: Property purchased in 2013. The property has been rented from day 1, and continues to be rented out. The land value for the block has significantly gone up in this time. Our intention is to build 3 units on the block in 2017 and either sell all 3, or retain 1 and sell 2. It is currently owned by 3 individuals: - A: 80% (does not have a main residence) - B: 10% (has a main residence) - C: 10% (has a main residence) Scenario 1: - Keep ownership as is. - Build 3 units and sell. How much tax is payable? · Income Tax Rate x (Total Sale Price – Land MV 2013 – Build Cost) OR · Capital Gain at Income Tax Rate x 50% discount x (Land MV 2017 – Land MV 2013) + Income Tax Rate x (Total Sale Price – Land MV 2017 - Build Cost) Scenario 2: - Form a trust and sell entire property to trustee company before building Tax Payable on sale to trust: · Capital Gain at Income Tax Rate x 50% discount x (Land MV 2017 – Land MV 2013) (Trustee would incur stamp duty on purchase) Tax Payable on build, when build profits are distributed to individuals, through trust: · Income Tax Rate x (Total Sale Price – Land MV 2017 – Build Cost) Scenario 3: - Keep ownership as is. - After construction Unit 1 is retained solely by ‘A’, and is used as their main residence for 6-9 months, and re-rented before selling. (Would be sold within 5-6 years if re-rented and ‘A’ would not hold another property as main residence). - Unit 2 and 3 are sold (‘A’: 47%, ‘B’: 15%, ‘C’: 15%. The initial ownership remains the same, with the proportion of ‘B’ and ‘C’ ‘s interests being higher as ‘A’ has solely taken ownership of unit 1). Tax Payable on sale of unit 2 and 3: - Same as scenario 1 except only 2/3? Tax payable by ‘A’ on sale of unit 1 after use as main residence: - Capital Gain at Income Tax Rate x 50% discount x (Land MV 2017 – Land MV 2013) + No Tax on (Total Sale Price – Land MV 2017 – Build Cost) Key Questions: - Will the CGT discount be available on the land for the period from the start of ownership up until the start of the build? - Will ‘A’ be able to take advantage of the main residence exemption if he lives in one of the new units for a few months, and then rents it for another few years? I also know we have to pay 10% GST on the sale of new homes. But I’ve excluded that for the purpose of the above scenarios, and focused more around income tax. Any help around this, and any other suggestions around structuring would also be much appreciated. Thanks in advance!