How to register my intention to subdivide for PPoR legally for HomeBuilder?

Discussion in 'Legal Issues' started by [d4rk-fr3d], 8th Jun, 2020.

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  1. [d4rk-fr3d]

    [d4rk-fr3d] Well-Known Member

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    Folks,

    Continuation from: Should I notify my bank when doing Subdivision?

    After reading this page: HomeBuilder | Treasury.gov.au I realized that I'm eligible for $25k subsidy from the NSW OSR.

    As at the moment, I'd like to perform a subdivision for my current lot so I can build another property for my own house (PPoR).

    I have borrowed for $1.8m against the property, the purpose is for an Investment property initially when I bought the lot.

    Now, if I'd like to divide the lot equally and create as follows:
    • 31 Smith Road, YAGOONA, NSW - Investment property
    • 31a Smith Road, YAGOONA, NSW - PPoR
    What is the step that I need to take legally so I can still be eligible for the scheme this year?

    Thank you in advance.
     
    Last edited: 8th Jun, 2020
  2. Archaon

    Archaon Well-Known Member

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    You should remove your address.

    You would need the land to be registered before you could qualify for Homebuilder.
     
  3. [d4rk-fr3d]

    [d4rk-fr3d] Well-Known Member

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    @Archaon do you mean I need to subdivide first?
    and then apply for the HomeBuilder scheme.
     
  4. Archaon

    Archaon Well-Known Member

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    I believe so, the time line for homebuilder is for construction to start within 3months of a building contract being signed, so if the land hasn't registered yet, then I dont see how you would be able to qualify.
     
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  5. Baker

    Baker Well-Known Member

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    The new home will have to be valued under $750k including land.
    If you've borrow $1.8m against the existing property (and I'm guessing as an equity release that might be ~80% of the property value) = a $2.25m asset.

    Are you saying you will turn that into 1 home worth under $750k, and then other has to be worth at least $1.5m just to match your initial asset value?

    And you will have to live in the $750k home (at least for a while)?

    I've missed something, or this doesn't stack up.
     
    Last edited: 9th Jun, 2020
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  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The vacant land test is a value of $750K.
    The knock down rebuild test is a $1.5M value and the 4 June date will come back in some way as a test and may consider those who owned land at that date differently to those who acquire after (this seem evident in the FAQ). If you hold vacant land the KDR test wont be met.

    The legislation (eg NSW law) have yet to reveal if a subdivided or partitioned lot could even be eligible. I would have doubt that a new title could be approved and created and all the contract elements fulfilled by the end date AND all for $25K.... You may also be blending a home with a profit making intention and TD 92/135 could pose a concern on top. And then GST etc. Subdivision of the lot alone will cost much more than $25K in extra costs

    This $25K grant is really intended for a class of people ready to sign building contracts on titled land. The $25K is a trivial element as an inducement that may pay for a driveway and some basic landscaping at best.
     
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  7. [d4rk-fr3d]

    [d4rk-fr3d] Well-Known Member

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    @Paul@PFI Thank you for your pointer on Legal Database, after reading through, based on my understanding, the CGT exemption will be void when I sell my Lot that is the PPoR.

    Hm, I never knew that a subdivision could cost that much :-|
     
  8. [d4rk-fr3d]

    [d4rk-fr3d] Well-Known Member

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    @Baker yes, that's what I'd have thought so.

    I assume the property price will be crashing or drop 20% by the end of this year, hence I can still apply for the HomeBuilder in December 2020 while the property valuation is lower.
     
  9. [d4rk-fr3d]

    [d4rk-fr3d] Well-Known Member

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    Registered after the subdivision?
     
  10. Archaon

    Archaon Well-Known Member

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    Yes, you will need to get a DA done, which could take 6months+ then you will need to satisfy the stipulations of the DA, connect services etc, then you take it to the bank and get them to endorse the plans, then you get your townplanner to lodge to LRS, could take weeks to months with LRS before the land is registered.

    You will need the land registered or at least close to registering when you sign the build contract with the builder as the build needs to commence within 3months of the contract being signed.

    This is at least my understanding of the current conditions.
     
  11. Archaon

    Archaon Well-Known Member

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    25k could just cover the contributions to council in some LGA's, then you have minor sewer/water works, connection of power/NBN etc, then perhaps upgraded infrastructure costs also.

    A recent subdivision cost;
    ~ DA $10k
    ~ Final Survey $7k
    ~ Private power pole $5k
    ~ Minor works $4.2k
    ~ S94 Contribution to council was $8k
    ~ Fence $4k
    ~ Demolish GF $3.1k
    ~ Removal of Concrete 2k
    = $43,300
     
    Last edited: 9th Jun, 2020