Purchase of Land to Build Duplex / Dual Dual Occupancy

Four of us, that is my parents plus my partner and I are about to place an offer to puchase a house in Melbournes South/East with the intent of knocking down and building a duplex (otherwise known as dual occupancy). Intent is for one of these to be owned by them, the other by my partner and I (Insert Everybody Loves Raymond joke).

We've never built or developed, in the event we're successful with our offer how should we structure this purchase and subsequent build?

- Should the purchase be made under all 4 names?
- We would look to rent the property in its current state until such time plans and permits are approved and builder appointed, will this make tax time next year quite messy... if so any advice? (note 3 out of 4 work full time, my mother is retired)

Any general experience in a scenario like this or other advice pertaining to building a duplex with this strategy in Melb would be much appreciated!

 

Speak to a solicitor NOW about a Deed of Partition. Important it be considered in Vic early. This is the document which will be needed to break the single title into two titles each owned by the others / yourselves. Otherwise you will own half their place and they will own half yours.

The legal advice now may save anguish later. Also needs early mortgage advice as funding will be complicated by ownership and servicing perhaps.

Tip : Build a thick firewall between them - Like about 3km thick.

 

One way might be to enter into a contract to purchase in 4 names. A deed to partition also entered into so that A and B hold 50% of the property as trustees for C and D with C and D holding 50% for A and B.

Later after settlement and construction title changes so that A and B own one of the properties and C and D own the other. Beneficial ownership hasn't changed and this therefore does not trigger CGT or stamp duty.

Initially the loan would be in all 4 names. Once subdivision is ready mortgage discharged and the loan 'refinanced' so that AB have one loan and CB have another, each loan secured by a mortgage over their respective properties.

The initial 4 named loan could also be split into 2 portions so each family can deal separately to the other.

Seek legal advice as this is one of many things to consider.

 

Make sure you engage a town planner first as Duplex (side by side) does use space efficiently. Probably safest to buy something with permits(may need to pay premium) or find a street which has duplexes on same block sizes.

Duplexes are OK but make sure it has North rear as only 3 sides have windows (for most designs) and if East or West rear one person will miss out on North light into property. Lack of natural light quite a common problem for duplexes

Wide block is important as don't know what you intending to build but 2 double garages at at least 6m wide doesn't leave much room for a good entrance especially with many councils not allowing building to boundary on both sides

For me building a duplex is good for developer and profits but crap to live in as the design is so vanilla

 

Thanks for the advice. Any recommendations for (ideally) Melbourne based lawyers with some background in this @Terry_w @Paul@PFI ?