# Subdivision Information?



## sparfarkle (6 July 2010)

Hi All,
I wanted to see if i can glean any info out of any property experts out there regarding fees on the sale of a new house built on my soon to be sub divided land.
My existing home will remain as is whilst the block will be subdivided and a 4by2 new build will be built at  the rear.
This new build will be sold on completion for app $550k,i am unsure if i will be up for stamp duty payable by me on the sale price and if so how much?
Another unknown is wether i have to pay GST on the sale,and if so can i claim this GST back as a GST registered share trader.
These are important need to knows on my feasability studies and any inputs will be greatly appreciated.

Cheers Sparf


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## trainspotter (6 July 2010)

sparfarkle said:


> Hi All,
> I wanted to see if i can glean any info out of any property experts out there regarding fees on the sale of a new house built on my soon to be sub divided land.
> My existing home will remain as is whilst the block will be subdivided and a 4by2 new build will be built at  the rear.
> This new build will be sold on completion for app $550k,i am unsure if i will be up for stamp duty payable by me on the sale price and if so how much?
> ...




Talk to your accountant. No stamp duty on sale of property but CGT will be payable by you to the ATO depending on how you are structured. Claimable GST also depends on how you are structured. Talk to your accountant.

Alternatively try here http://www.ato.gov.au/businesses/content.asp?doc=/content/00198744.htm

and here http://www.ato.gov.au/businesses/content.asp?doc=/content/42072.htm

None of what I have written constitutes advice other than "go and talk to your accountant".


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## trainspotter (6 July 2010)

I am sure this topic has been dealt with before in here? Tried to use the search button and it reckons "below the three word minimum"?

Maybe Joe Blow we can have a "property" section similar to "General Chat" and "Investments and Economics" ?? to keep all this kind of stuff in perhaps.

Also try here sparfarkle http://www.aussiepropertyforums.com/


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## Joe Blow (6 July 2010)

trainspotter said:


> Maybe Joe Blow we can have a "property" section similar to "General Chat" and "Investments and Economics" ?? to keep all this kind of stuff in perhaps.




I must admit that I'm not keen to expand any further beyond the stock market with ASF. I know we'll get the occasional property thread here but I always want the focus to be on stock market investing/trading otherwise after a while this place will lose its focus and stop being a stock market forum.

I would prefer real estate/property discussion to be over at Aussie Property Forums but I realise that the amount of traffic ASF gets is considerably more and questions/queries get answered a lot faster here.


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## sparfarkle (6 July 2010)

gday ts,
thanks for the info,due to see the accountant soon just trying to get an idea on a couple of things first to keep his bill down.
I am solely a registered share trader,the s/d will be kept as a separate entity from the business so apart from claimable buiding expenses profits i suppose will be the same as selling an investment property.
The GST caught me unawares though,that could shave over 25% off my est profits
Would GST be payable on just selling off the sub divided land,if not that may be the easiest way to go unless i CAN claim it thru being registered as a trader.
Have to see what the accountant says.

cheers
Sparf


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## trainspotter (6 July 2010)

Thank you Joe. In total agreeance on this matter. It just seems we get one of these a month in here and just suggesting it might be possible to lump them in the one "topic" basket. Would be easier to point them towards http://www.aussiepropertyforums.com/ I guess.


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## trainspotter (6 July 2010)

sparfarkle said:


> gday ts,
> thanks for the info,due to see the accountant soon just trying to get an idea on a couple of things first to keep his bill down.
> I am solely a registered share trader,the s/d will be kept as a separate entity from the business so apart from claimable buiding expenses profits i suppose will be the same as selling an investment property.
> The GST caught me unawares though,that could shave over 25% off my est profits
> ...




If you are registered for GST then you can claim the GST during the course of construction on the goods and services. Basically 10% of the contract price to construct as well as the price of the subdivisional costs.

Ask your accountant about selling it under the Margin Scheme therefore you are only paying the GST on the profit. Once again it all depends on the structure of how your accountant has you setup for taxable purposes

NO stamp duty applicable on the sale of property for the vendor that I am aware of. Stamp duty is applicable for the buyer of the property. Have you thought of selling it as a "house and land" package dealing? Sell the land for X and the building contract for Y (obviously with margins)

If you are worried about paying for good financial advice from your accountant then I would not be going into property development if I were you.


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## sparfarkle (6 July 2010)

Fair comment ts,
I dont really consider it property development as its a one off thru a bit of good luck with rezoning and i agree that good financial advice is priceless.
Its early days yet and with not being involved in property dev, just trying to get a ballpark figure as to whether its worth the hassle of tying up my time for the next couple of years or not is where im trying to get to.
Ive had a look at APF and Joes comments re the traffic are very true.

The margin scheme scenario will also make me sound like i know what im talking about when i approach the accountant,thanks for that.


Thanks a lot
Sparf


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## sparfarkle (6 July 2010)

Just had a blinding flash of clarity but correct me if im wrong.
GST is payable ONLY on the final profit NOT on the sale price.
Would this be before or after capital gains tax.

sparf


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## trainspotter (6 July 2010)

sparfarkle said:


> Just had a blinding flash of clarity but correct me if im wrong.
> GST is payable ONLY on the final profit NOT on the sale price.
> Would this be before or after capital gains tax.
> 
> sparf




Depends if you are using the margin scheme for the GST of the profit rather than the sale price. Depends if you are claiming the GST during the course of construction and subdivision. Lots of "depends" sparfarkle. There are too many ways this can be handled for GST and taxable purposes depending on how your accountant wants/has you setup for this purpose.

Capital gains is on the difference of the cost to the final sale price and will be applied after the GST component has been removed from the equation. My understanding is no matter how greedy the ATO is they will not be charging you CGT on your GST ! LOLOL

Anyways.... talk to the accountant. They have all the answers on these matters.


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## bellenuit (6 July 2010)

Some good info on GST here. But do talk to an accountant. The GST issue on properties is not clear cut.

http://www.bantacs.com.au/booklets/How_Not_To_Be_A_Developer_Booklet.pdf


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## bellenuit (8 July 2010)

A useful article on the subject from Momentum Wealth in Perth

TAX IMPLICATIONS OF SUBDIVIDING THE FAMILY HOME (PART 1)

http://www.momentumwealth.com.au/Taximplicationsofsubdividingthefamiyhome.cfm


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## sparfarkle (8 July 2010)

Gday bellenuit,
WHAT CAN I SAY!
Fantastic couple of articles duly saved for future reference.Thanks a lot mate.
I am requesting Momentum Wealths info pack,interesting since they were recommended by investor82 in a previous thread on subdivision.
Have you had any first hand experience with them yourself ? 

Cheers
Sparfarkle


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## bellenuit (8 July 2010)

sparfarkle said:


> Have you had any first hand experience with them yourself ?




I first contacted them after I read a post on another forum recommending their property development specialist, Emma Everett, to handle project management of a new development. 

I had a consultation with Emma and also heard her speak at a recent seminar on property investment. She is a smart cookie and comes across as someone who is genuinely interested in your prosperity rather than being just a property spruiker. However, I decided not to use her services because I am retired and have time on my hands, so I am in a position to undertake many of the services she offers myself. 

I have registered for their newsletter though and that link was from their most recent. It always contains good stuff.


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