Deed of Partition & Development

Discussion in 'Development' started by Bob1, 11th Feb, 2020.

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  1. Bob1

    Bob1 Member

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    Hello

    I would like some advice. My sister & her husband own a property which we were considering knocking down and erecting 4 townhouses on. Whilst they own the land and have a small mortgage on it, I was going to borrow and put up the funds to build the 4 townhouses.

    Is there a way for me to claim ownership to say 1 or 2 of the units (depending on the agreed split based on value etc etc)? Will a Deed of Partition allow for this?

    Thanks
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    You should seek legal advice if you want advice.

    You can't partition property you don't own - or borrow against property you don't owner, generally.
    You will need to either have title transferred to you or the owner declare they are acting as trustee for you.
     
  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    GST and CGT (or income tax) triggers for the owners may be a concern to effect a partition. As Terry says you cant partition a non-owner unless there is evidence of a trust as its a change of interest. And that isnt easy. OSR are in the business of taxing changes of owner and schemes to evade duty.

    There are some complex issues of taxation including how to deal with the CGT / Revenue events and GST etc. And the issues involved for the margin scheme.
     
  4. Ross Forrester

    Ross Forrester Well-Known Member

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    I think you will ultimately go to a joint venture where you will buy a lot off the plan. A deed of partition might be part of the solution but I do not yet see how.

    There are many ways to look at this and you are talking large numbers. Make sure you get clarity on how the whole thing will work.
     
  5. Bob1

    Bob1 Member

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    Thanks guys, so me contributing funds to build on their land isn't so straight forward. Looks like the owner of the land will likley be hit with CGT if they are to sell 1 or 2 of the townhouses to me and I will have to pay stamp duty & transfer fees if i am to buy off the plan from them. These costs would ultimately eat into profits margins :(

    The land is currently in their individual names as it is presently their PPR so there is no trust involved at present :(
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    You could seek advice on buying half now so no CGT for them. Partition it and then end up with 2 each and go your separate ways.
     
  7. Bob1

    Bob1 Member

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    Thanks Terry I will explore this option.
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Another idea - you fund it and argue a resulting or constructive trust.