Account structure please?

[Proprtyhunter]

I would like to get your advice to set up structure of two investment properties.
Below is my scenario.
1. I have just one PPOR with 500K IO loan. Offset credit of 300K. Current lender won?t allow equity loans but allows split loans.
2. I bought a land from landcom over the weekend. I also bought 50% share of another lot from Stockland with one of my friend.
3. Both lots are unregistered now. I need to pay $15k deposit now for landcom lot and $5K deposit for the Stockland lot. Both lots will only be available to build early next year.
Should I create two separate split loans to pay deposit for both IPs? Or can I pay deposit using one split loan. My intention is to build both properties. Hold landcom property for long term and sell Stockland property after one year of construction.

 

[Terry_w]

One split for the investment portion is ok,, but there can be benefits of having a split for each, especially if there is a loss on eventual sale

 

[Paul@PFI]

If the intent is build and sell then there are some issues you should be clear on:

1. GST on the sale of the new build Stockland. If Landcom build is sold within around 6 years it may also be subject to GST. There may be some GST you can claim to reduce the GST outgoing.
2. Stockland build = No CGT discount...This is ordinary revenue. The twelve month issue can be ignored really
3. Stockland - interest deduction ?? Landcom likely deductible.

There is likely more issues than these but this is a start.

Buying land can be either a capital gains issue or a revenue trading stock issue. There is no requirement for repetitive behaviour etc. It is your intent at the time of acquisition etc.

You should seek personal tax advice. Remember too that if the joint land is sold and taxes unpaid you are BOTH jointly and severally liable. If you have assets and your friend not I would be concerned you could end up with the tax debt.