Questions about building or selling the DA

Currently have a PPOR (over 6 years) worth about 1.3M.

We have spoken to neighbours and we have 2x2 blocks backing onto each other (4 blocks total) that is getting a DA to build 12 residences in total split evenly on each block. My brother and I control 2 blocks.

Now it seems like i have a few options.

1. Sell the DA and get 1.6M
2. Develop the land (approx 900K build cost) and live in 1 as PPOR, rent the other 2 out. I will get 2x 2 story townhouses (aprox 1.1M/each) and 1 villa (aprox 800K)
3. Get development loan and presell 1 to cover the build cost.

My current situations is that getting together the build cost via refinancing for me is probably not a option so will need to borrow further from family/friends or a development loan. I would like to limit my tax liability and risk also.

My questions are the following:

1. If i go with option 2 and build the 3 dwellings, how long after i live in the new PPOR before it is exempt from CGT? Will it be exempt from all CGT or will CGT still be payable between the land/build price and the valuation at the end of the build?
2. If i go with option 3 and presell the villa, do i base the underlying cost on 1.3M or 1.6M with the DA / 3? If it is say 1.3M/3+300K = 733K and pay CGT on the 67K profit?

Sorry if these questions sound very dumb, just have not really done anything like this previously.

I am happy also to get some paid help as to how to structure it if we were to go ahead with the JV, we need to limit the liability risks of having the unknown of the 4th block owner.

 

.

Hi firstBuild, welcome !! I haven't been on the site for a few days and so only seeing your post now. Have to say, I'm really surprised you haven't had more responses!.... Don't be discouraged, it looks like you have had only 32 views to date, so you might just need to get propagated a bit, we can do a bit of that now.

There are some very smart money, tax and structure people on here and I'm not one of them so I'm no use to you on your queries .Hopefully any of @Scott No Mates @Terry_w @Perthguy @Bran @skater @Jess Peletier @House or many others might be able help you with those.

However with regards to the option of value adding with the DA, I can. couple of questions first.

Currently have a PPOR (over 6 years) worth about 1.3M.

Is that 1.3m value as a residence or a stand alone 3 t/house site?
Who would prepare & lodge the DA ? and who would manage it ?
The 900k build cost, have you done any work on those figures or are they a guesstimate?
I am going to take a stab and guess that they are on the gold or sunshine coasts?
It could be in New Farm but finding the 4 together is near impossible but and they have to all be post war so highly unlikely. - How'd I go ???

 

Thankyou for the mention, but I can't help much with subdivisions. I'm sure there's a heap of others that could assist though. Come along to the meet-up in November at Wenty & you can meet some successful investors.

 

@Leo2413 @Be Developer