I recently built three townhouses, one to live in as PPOR, one to rent out and have sold the third. So I have obtained a QS Tax Depreciation report for the middle unit. My total costs, including GST, was around $1m. This covered design, plans, permits and a reasonable sized open space contribution to the local Council etc. In terms of relative value, the unit I am renting is about 30% of the overall value. However the value attributed in the QS report is about 22% of the total cost. Is this difference reasonable, and I assume that some of the costs such as the OS contribution are excluded. Just wanting to ensure I have the schedule of depreciation correct.
Personal tax advice is needed as its complex. The GST claimed on the build (1/3rd) will impact costs as would a reasonable apportionment. ALL costs must be apportioned incl the contributions etc...They affect costbase and tax outcomes. Our development toolkit addresses reasons why a tax plan when you commence is important and so all costs are captured and correctly apportioned. When you sold one the GST on its share of build could have been claimed and reduced the GST paid on the sale using the margin scheme if you used it...All that affects costs and even tax outcomes. Have you even read TD 92/135 ? That ruling takes the view that a development site can render a later main residence exemption invalid and unavailable.
When developing property a tax plan will save mistakes and errors so profit is maximised. In many cases use of the margin scheme is overlooked. It can change a 20% profit so it becomes 25% eg $50K more profit. Overlooking GST would drop the profit to 6-10% Overpaying and underpaying tax are both mistakes that come at a cost.
