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Developing one parcel multiple entities

Discussion in 'Accounting & Tax' started by Cactus, 15th Aug, 2016.

  1. Cactus

    Cactus Well-Known Member

    Joined:
    18th Jan, 2016
    Posts:
    998
    Location:
    Melbourne
    My Brother and I are looking at doing a four unit site.

    I want to retain and live in one of the units indefinitely, probably even retaining as a rental property should i move out.

    My brother wants to retain one as a rental property.

    I have a family trust.

    Can I buy the property in 25% my name, 25% brothers name, 50% P/L ATF family trust name. Pay Equity amounts in these seperate individual/entities. On subdivision at Titles Office, have two units issued in the P/L ATF family trust, one in my name and one in my brothers name?

    Can I hold the investment as PPOR?
    Can my brother hold the investment on Capital Acc?
    Can Trust claim its share of GST, and hold on Revenue account?

    @Paul@PFI I have read your guide, and believe this to be possible if I live in the investment for atleast a couple of years, and rent it out for 2+ years (although no minimum just saying more than the 3 months). Further obviously holding no longer than 6 as rented investment to retain full PPoR exemption.

    Thanks!!!
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,039
    Location:
    Sydney
    Yes you can possibly do that. Look at my tax and legal tips on 'deeds of paritition'.

    get some good advice.
     
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  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    TD 92/135 is the relevant ruling you have ignored. This ruling adopts the view that where a property is constructed and gives rise to ordinary income even from a isolated transaction that a CGT event does not occur and thus the main residence exemption cannot occur as the MRE is a CGT exemption. not an income exemption.

    Deed of partition is a way BUT.. it comes with a GST issue