Spearwood Project - done and dusted

T

Thanks, overall happy with this project for first, good learning curve
Got the tip for staging from your gwelup project, looked pretty damn good

 

Great job.
How long did it take may I ask?

 

Hi DT

9 months from pouring slab, but another development just around the corner, similar size project took around 7 months. I know it's seems like nothing but probably equates to $7000 holding costs

The problem was the builder had a project manager who was too busy managing his own personal projects so I was running around collecting tiles etc which delayed project. My g/friend was also building on same Street same builder, same scenario, 2 months over.

MTR

 

Great result Marisa, especially since the market has come off the boil. The elevations that Joe designed for these really set them apart from most developments in the area.

 

MTR

Fantastic outcome, well done. Thanks for sharing your journey with us.

 

Congrats, Marisa!

Another inspiration for us newbies The products look fabulous, and the staging was money very well spent.

 

@MTR
Could I ask what the colours you used for the external walls and the colour of your fence.

 

You mention CGT. This sounds like a profit making venture and will most likely be taxed as ordinary income, in my unqualified opinion.

Regardless of tax, that is a great return in 9 months. Congratulations.

 

Had to dig it out, Harvest for fence and external walls. Worked out well.

Next project in Perth I am going to get an interior designer to pick all the colours, specs everything. Only because I am always second guessing myself, just not worth the headache.

What I think is interesting if you can get the right interior designer they can actually save you money, for example most people will go brushed steel for handles? I think that's what its called kitchen, laundry etc we went polished, what a difference, you have bling, looks expensive and not the norm, stands out, however same price. These are the little items that can make a difference to end product.

I am sure many on here have other little tips and I will be soaking it up.

MTR

 

Alas now I second guess the Interior Designer and myself. It's the downside of being a control freak

But they can get whole sale rates on many items and that does help if your builder is happy for you to supply certain things and just charge for install. It's probably not too relevant for a vanilla spec place but there are some high end items I'll be using for the Highgate townhouses to get them into the $1m zone and my PPOR that I'll be sourcing via the interior designer rather than the builder,

 

Want the good news, the bad news or the other bad news?

From what you state you will be liable for GST. By my rough calcs $30k is about right.
You wont be liable for any CGT in any case as you are paying GST (this isn't capital income but trading income), so you get to keep your losses for another day.
You may be liable for income tax in the trust. At company rates (30%) its an additional +/-$50k.
Given that the properties were held in a trust and will distribute the income - if the entity/individual is on a higher than 30% tax bracket - you may also need to pay the difference there too.

My numbers are rough, Im not an accountant, and I don't know your personal situation/structure - so don't listen to a word I say...Im probably wrong.

Blacky

 

Thanks Blacky

There is another angle I also consider, today the market is now falling and possibly these would be worth 10% less than sale price?
For me the plan is to weigh it all up on completion of deve. I want to cash up when I can, as I know I won't always have a choice and don't want to hold for years with no growth.

Got stuck with stock in last boom when it tanked, I would rather take my money and move into other markets. Though I am sure sometimes it will best to hold the lot, many variables to consider.



MTR

 

Well done!

I think your estimate of GST is very close to the mark.

A quick little lesson on how to work out the GST yourself. Calculate how much you have collected less what you have paid.

Collected: Assuming you use the Margin Scheme (ie the Contract of Sales should have Margin Scheme written in them and you also meet the criteria) Total Sale Prices (1,533,000) less the Raw Purchase Price you signed the purchase Contract for (lets just use 541,000 even though you say this figure includes stamp duty etc) = a Margin of $992,000 inclusive of GST / 11 to get the GST Amount = 90,181 GST Received/Collected.

GST you have Paid : Your building contract will most likely include GST of $52,636 (579,000/11) Parts of your headworks will include GST, you will need to go through and itemise/look at invoices to calculate where you have been charged GST, lets just say you have paid $4,000 worth of GST there, the Agent Fees will normally also include GST, so another $2,787 (30,660/11). If you look at what you have paid, you should have invoices noting GST amounts on them. Interest/Holding Costs not generally subject to GST. So calculating that there is going to be roughly $59,423 in GST you have paid.

Collected = approx 90,181 less what you have paid 59,423 = approx $30,758.

So my rough calcs are pretty close to yours.

I would say for most people it would be something along these lines - however our tax system could never be so simple all the time and there are circumstances where one is not eligible to use the Margin Scheme.

For more info or if you want to read up on it there is plenty of info on the ATO website https://www.ato.gov.au/General/Prop...nchor=considerationmethod#considerationmethod

 

@willy1111
Thanks for the example.

could you advise what are the criteria to qualify for or to use:

1. the margin scheme?
2. when do you need to register for GST?

 

@stumpie,

Don't take it as advice - do your own research

1. https://www.ato.gov.au/General/Prop...?page=4#When_you_cannot_use_the_margin_scheme

2. I would register for GST once you have bought the block and decided you are going to develop and sell - that way you can claim the GST as you go along to help fund the project, ie you complete your BAS quarterly and the tax office refunds you the GST you have paid each quarter - you don't have to pay GST to the tax man until you have sold.

 

T

hanks excellent

 

Well done Marisa - you are one amazing lady.

 

Thanks Shahin

 

Spearwood house median fell 1% in the last 12 months. However this development made 20% profit. How is this even possible?

Awesome work MTR!!

 

Thanx RR101

I think developers have thick skin, seriously we have the tax man that wants to rape us and we are at the mercy of market conditions. Gluten for punishment



MTR