My parents own a fairly sizeable block of land and we would like to knock down their house and both build a house. I have been looking into a duplex to save subdivision costs. My mortgage broker has advised that the mortgage can be split even though the land is in my parents name. The plan was that my parents will put in their will that the land will be subdivided and we would receive our half. However, my mum just pointed out that they may need to go into a nursing home one day. If that's the case we would subdivide and sell their half. But I'm wondering if there would be any CGT issues with the half that is gifted to us? Or would we will still just keep the land in their name on our side? Or are we better off just subdividing now? And if so, what is the CGT implication of the half that we get? Thanks, so sorry for the rambling! Hope it makes sense.
I'm taking it, that you are not the sole child, so you'd like the property split into two, so that another sibling can benefit. If this is what you are planning to do, then it's probably best for all concerned to sub-divide now and not have something messy to deal with later on.
How big is the block, and what is your local area council? Putting a sub division in a will sounds messy and unneccesary, who will be in charge of the subdivision when they pass? will they still be around, is it possible? What added costs will there be, where will the money come from, who will oversee it etc I would suggest subdividing now would be the best bet, whilst everyone can get the necessary finance etc, the future is full of unknowns.
Subdivision is not a 2 week, tick a box exercise but will take many months and shouldn't be attempted when you're focussing on getting a family member into a nursing home. Much easier to do it at the same time as the DA/CC and to separate the assets now as the rules for subdivision may change and derail your plans.
About 800sqm (maybe more). We are in Marion Council. I'm just trying to think of the best way we can minimise CGT and subdivision costs.
Depending on a bunch of other factors, which needs the advice of a Town Planner and your blocks dimensions to comply, but you could be able to create 2 Torrens title blocks without there needing to be a duplex, i.e they can be completely separate without strata or joined in any way. Marion As stated above, subvision takes many months to accomplish, and there can be plenty of hidden fees and complications along the way.
So if we do subdivide, will my parents need to pay CGT on the land that they gift to us? Front of the block is 12m.
Is the block 70m long? Does it have more than 1 street frontage? I believe stamp duty will have to be paid at market value as gifting doesn't circumvent that, on CGT I'm not sure, someone like @Terry_w or @Paul@PFI are the ones with the knowledge on such things as they're accountants.
A mortgage cannot be split unless there are separate titles, but the loan could be split into 2 portions whether there are separate titles or not. You cannot be on the loan though unless you are a legal owner. CGT will be an issue, but there is a way it could be nil, but stamp duty would be triggered. They should not gift you. GST needs to be considered too.
Before you go too much further I suggest you check out the width of the frontage. Looking at the plan and the scale on it, it doesn't look like 24 metres which would be required for 2 x 12m frontage blocks. Will they allow battle axe blocks?
How could we make it nil? The frontage is only 12m so we'd have the duplex a little further back and each house would have about a 9m width.
The parents will likely have a CGT trigger. IF its setup the way described they will hold "your" land on trust hence a CGT event occurs when that is created. It could even be a land tax concern. That in itself isnt a potential tax problem as its likely 100% exempt for them (?) but it indicates the degree of complexcity. There are also complexities regarding what is yours / theirs. Provided your dwelling is intended and remains you home I dodnt forsee major issues BUT if anything occurs outside this there could be all sorts of concerns. You could even create a joint and several GST liability. I would be seeking legal advice as this sounds messy . Things that sound messy generally become a horrid mess at some point. The aged care issues should also be considered as Centrelink will likely see a gifting issue that possibly stops pension benefits for 5 years that also impacts aged care
