FHB JV - Land & Built

I was thinking to join forces with the friend of mine. I buy the land at $600k which will give me max saving on stamp duty here in Victoria. He develops 2 THs @ 600k and "give" one to me and keep the other one. Has anyone done something similar? To do this and avoid taxes I guess we should create a company with 50/50 ownership and close it down once finished? We are both borrowing to reach the $600k.

 

For me the risks outweigh any stamp duty savings and is not worth it. I'd just buy established. Unless the TH you end up with has at least 25% equity created through the development. You need to look at return on development costs to determine risk/viability of a project.

For example if your TH costs 600k all up to build and it's valued at say 800k, so you created 200k equity ( not counting your deposit). Then it may be worth it to me.

Risk needs to be front and centre always.

 

How much would a new or newish townhouse/duplex cost in the area?

whats the friends experience with development.

 

Deed of partition?

 

Get some legal advice,
that will not save duty and will create needless tax issues.

 

Thanks guys, all good comments. It is just the FHBG & PPOR that are always in the background, real temptation for me

 

And you feel the need to throw building and friends into this why?

 

Not a great idea.
Just buy established for 600k and be done with.

 

This.... Believe it was called a Partition of Title. Get one drafted prior to getting the land and then you can both be on title through the whole process. Doing this now with a mate.

 

But partitioning will need to be considered with the stamp duty concessions.