FHB JV - Land & Built

Discussion in 'Investment Strategy' started by Luca, 16th Jan, 2020.

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  1. Luca

    Luca Well-Known Member

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    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.
     
  2. Sackie

    Sackie Well-Known Member Premium Member

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    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.
     
    Last edited: 16th Jan, 2020
  3. Trainee

    Trainee Well-Known Member

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

    whats the friends experience with development.
     
  4. Hamish Blair

    Hamish Blair Well-Known Member

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    Deed of partition?
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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

    Luca Well-Known Member

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

    Trainee Well-Known Member

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

    albanga Well-Known Member

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

    Mick Butterfield Well-Known Member

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    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.
     
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  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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