Knock down rebuild sales offer

Saturday we decided it was officially time to list an inherited property that has a bomb of a house on it, id say the house is beyond repair actually.

Anyways, we spoke to the local agent and he recommended a building company in the area that would be interested in it as a knock down rebuild site.

Long story short, the builder is actually offering to pay for lodgement of his plans for a new freestanding home on the condition we sell as a house and land package for him. They get the build rights with the new owner and I guess its money in their pocket.

His process was all disclosed and they don't seem to be asking the world from the new buyer either, just making a margin on the build which was 20%. Im also in the building industry and couldn't really fault his model, they are reputable in the area.

Its good for us, we approve the design and impressions and its putting another 10k on the sale price.

Am I missing something here?

 

Sounds like a huge risk for not much gain.

What happens if the builder goes broke half way through construction?

You are signing the contact with the buyer, which puts YOU in the ”deep do-do” in the event of any dispute.

Since you are in the building industry, why don’t you do the build? Or demolish the house and sell the vacant land?

 

Yes - You may create a GST issue by participating in a profit making enterprise. And any profit isnt a CGT issue and exempt if it was. The builder is having you on but hiding behind you as owner. You will incur tax problems. After taking GST out of the sale of vacant land in furtherance of a enterprise you will be worse off. You and the builder would need a partnership ABN. They could go broke and leave you liable and much more.

If you are planning to sell an inherited property potentially tax free (within 2 years?) this isnt the correct approach

Personal tax & legal advice perhaps ?

 

Enough said!

I love this forum!

Thanks for the comments, life saving in this instance id say!