How to build duplex with Parents land...Partitioning?

I’m not sure which subsection this should go under so hopefully this one is correct.

Parents own a house which they bought in the 90’s.
This house is old and run down and they are unable to renovate or want to move.

Since they are getting older and one day we’ll have kids we thought the best way forward as a family is for my wife and I to build a duplex house (side by side).
The reason for this is that we can look after them when they are old and they can help with looking after the kids.

The wife and I have said that we’ll finance the build since my parents own the land, that way, in our minds each party has a brand new house and land.
I thought this would be straightforward and each party would then end up owning 50% (depending on the sub division) of the land and a separate title, however this does not appear to be the case.

I’ve searched the forum and the internet on how to do this correctly and the best we could find was comments on “partitioning”.
Unfortunately there weren’t any examples with figures and procedures.

We did ask the builders if they knew how to do this since all of them were “1 turn key” (basically hand over the money and they will in return build the house and organise everything) but all they could comment on was that they can do the subdivisions and don’t do anything with titles.

To help in this example I’ll use the following figures:

Parents Purchased PPOR in 1990 - $150k
Valued today - $1.1 million

To build a duplex $950k

From what I understand in Partitioning, before we build I would need to purchase a percentage of the land to get onto the title, lets say 45%. ($495k)

• Since this is my first home would I need to pay stamp duty?
• If I need to pay stamp duty would it be of the 45% purchased land? i.e roughly $23k ($495k)
  • Stamp Duty Victoria (VIC)
• Since its my parents PPOR and only property do my parents need to pay capital gains?
  • If they need to pay capital gains would it be on the $495k amount? i.e approximately $89k (on the $245k)
• If partitioning is what we are suppose to do, when do we do this?
  • Do we have the builders draw up the plans of the house with the percentage coverage of each house first?
    • Do we then do the partitioning next and wait for that to be processed before subdividing\title changes?

***We actually don’t have enough funds to pay for building the duplex AND the percentage of land ($495k) so is it possible for the parents to gift that amount to us?
***We are happy to pay the stamp duty

Am I absolutely wrong about partitioning or the way we are going about it? Welcome any suggestions.

We will be seeking a property lawyer (we assume we need one??) to assist with this but would appreciate any assistance.

 

Get legal advice. There are many ways it could be done. One is to become joint owner and partition so that upon subdivision no further duty is charged.

Another way is to just become a joint owner, perhaps for as little as 10%.

What you do will depend on the circumstances of each party and their estate planning goals

 

I did this with my mum's place. You will have to go on title and pay stamp duty. Then you can mortgage a construction loan for the build. Expect to pay more as knock down rebuild the build might sting you for narrow site access and other bs.

 

You don't necessarily have to go on title, but if you do duty could be minimised by going for a small ownership such as 10%. But the back end profit needs to be considered too.

 

I would speak with Terry. His specific advice could save you a fortune.