Commercial Construction Loan Broker in Syd

Hi all,

I am doing a JV with 3 other neighbors.

We are looking to borrow 25-30% of GRV value on 12 townhouses that we all wish to retain. Remainder of the build will be self financed.

Does anyone have any recommendations?

 

Is there any low doc options since the security (the amalgamated block) is worth more than we are wanting to borrow?

 

try @Shahin_Afarin

have you sought legal advice on the tax and revenue issues?

 

Yes i have and i think we were all naive to do this without understanding all the implications.

From my understand from speaking to a construction lawyer and tax accountant:

1. We need to do the amalgamation after demolition, which means we will all need to pay stamp duty so we can all be 25% in the title of the new lot. Then once we are done, since the % of ownership does not change, there will be no further stamp duty.

2. There is GST implications when the partitions are executed of 75% of the total value (using margin scheme) when we transfer these to co-owners.

But i have more questions that i need clarity on (waiting to speak to a solicitor as a group) like:

How is the GST amount calculated? We know the build cost but how is the land portion calculated? Does a QS do this?

When does the partitioning execute? Could we transfer shares of the vacant land and pay the GST on that only?

I will have many more for Denis lol.

 

Some more
what about the CGT aspects - possibly none straight away as bare trustee for others.
What happens to the loans and mortgages on the individual properties?

be careful about transferring vacant land as the main residence exemption will not apply if the beneficial ownership changes.

 

Hi Terry,

It is my understanding that there should be no CGT implications and even if there was, because it is being setup as a strata, there is a rollover exemption. I still need to get clarification on this matter.

In regards to your point about the exemption, could you please elaborate further about it? We have that exemption right now, but once we amalgamate the land, shouldnt this just be a transitional phase? Meaning that once the buildings are built and we partition off the townhouses, the exemption would reapply to the dwelling we will be living in.

 

that would be the case if your entitlements are the same.
If title changes hands when the house is demolished there is no main residence so the main residence exemption can't apply.
You need some advice on these aspects to make sure.

 

Hi Terry,

We all have the same exemptions right now (PPoR) but i will add this to my list of questions.

Thank you for your help.

 

It will depend on how it is structured. If, for example, you construct 2 townshouses on your land, there is a deed of partition, and you live in one of the townhouses for at least 3 months, and this is not on revenue account, then the main residence could apply potentially to one of those townhouses. But if one of the townhouses straddles land originally owned by someone else this is where it gets hairy in both duty and tax.

 

Hello Terry,

All the townhouses that we retain will sit on the original land we contribute to the project. So there is no change in that respect.

We designed it in such a way that there would be no issues with dividing up the properties at the end to avoid issues like this.