Developer tax question - real life scenario

Perthguy · 25th Oct, 2016

Paul@PFI said: ↑

The idea that you can keep a property for 5 years then sell without paying GST is correct BUT its a very invalid conclusion. It may not really save that much in the long run. During the five years 100% of the change in value is taxed as its not a capital gain, the GST on costs cant be claimed and the property will be "used" and no longer be as easy to sell.
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This is true and is only one consideration. Some other considerations might be:
- the properties are positive cashflow
- the properties are negatively geared
- depreciation
- capital growth

The idea of a "used" property not being as easy to sell is a valid consideration. You may need to do some work on the property to sell it, i.e. new carpets and paint. The payoff maybe increased value due to capital growth.

big max · 25th Oct, 2016

sanj said: ↑

If the market and construction values are accurate, youre likely to make significantly less than the 1.5m, dont forget not just gst but seling and marketiny fees, contingencies (make.sure this is at least 10% if your first development), planning/design/consultant costs, demolition of existint property and site costs etc.

The reason i say this is because Its important to.get the true figure nefore deciding whether or not to go ahead wirh the development . in some cases it can often be simpler and easier to sell a site thats been held for a while, (depending on what the intent was when site was bought), crystallise the gains now and take.the 50%cgt than.to.go.through the whole process, take on.much higher risk, spend lots of.cash and time and then be taxed significantly more.
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Thanks and yes agree. Last 20 + years I have always make money simply on buy low sell high, knowing exactly the risks of developing. However this time around, especially seeing the growth cycle underway on the Gold Coast I need to consider if developing is indeed the better option.

big max · 25th Oct, 2016

Paul@PFI said: ↑

The idea that you can keep a property for 5 years then sell without paying GST is correct BUT its a very invalid conclusion. It may not really save that much in the long run. During the five years 100% of the change in value is taxed as its not a capital gain, the GST on costs cant be claimed and the property will be "used" and no longer be as easy to sell.
Click to expand...

Arg - tax is so complicated. I wish it was more simple like HK or Sinagpore for example.

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Developer tax question - real life scenario

Perthguy Well-Known Member

big max Well-Known Member

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Developer tax question - real life scenario

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