rough run down of profit analysis for 1 into 2 subdiv
Hi Domma35, here is a run down of how I would do a profit analysis using the following simple example:
-$500,000 original purchase price of old house on subdividable lot
-$ 25,000 stamp duty/ closing costs
(put a tennant in for 12 mths while all applications are put to council, assuming $400 per week rent, 6% interest, with nil depreciation, 30% marginal tax rate, and $5000 allowed for council rates, insurance, maintenance, water, this property is cash flow negative over 12 mths by
-$10,000 holding cost
-$40,000 subdivision (subdiv costs vary greatly but this should cover it)
so all up it cost a total of -$575,000 to carry out this project
now you own an old house on courtyard block, new value $400,000 plus a
courtyard block of vacant land at value $300,000
$700,000
-$575,000
= +$125,000 net equity that you have generated
now lets assume you sell both:
-$25,000 agent commisions and advertising costs
Total profit $100,000 but you still got to pay capital gains tax on this, you get a 50% discount for holding over 12 mths, so lets say you already have a day job and this extra $50,000 added onto your taxable income puts you into the 37% tax bracket you loose $18,500 of your profit
so all up you get to keep $81,500 clear for 12 mths of paper work, a few headaches, and clearing a block/putting up a new fence, not bad in my book.....
(disclaimer: this is just a rough guide to help the newbies follow my way of working it out, obviously results vary widely depending on multiple factors, always due your own due dilligence)
Hope this helps
Hi Domma35, here is a run down of how I would do a profit analysis using the following simple example:
-$500,000 original purchase price of old house on subdividable lot
-$ 25,000 stamp duty/ closing costs
(put a tennant in for 12 mths while all applications are put to council, assuming $400 per week rent, 6% interest, with nil depreciation, 30% marginal tax rate, and $5000 allowed for council rates, insurance, maintenance, water, this property is cash flow negative over 12 mths by
-$10,000 holding cost
-$40,000 subdivision (subdiv costs vary greatly but this should cover it)
so all up it cost a total of -$575,000 to carry out this project
now you own an old house on courtyard block, new value $400,000 plus a
courtyard block of vacant land at value $300,000
$700,000
-$575,000
= +$125,000 net equity that you have generated
now lets assume you sell both:
-$25,000 agent commisions and advertising costs
Total profit $100,000 but you still got to pay capital gains tax on this, you get a 50% discount for holding over 12 mths, so lets say you already have a day job and this extra $50,000 added onto your taxable income puts you into the 37% tax bracket you loose $18,500 of your profit
so all up you get to keep $81,500 clear for 12 mths of paper work, a few headaches, and clearing a block/putting up a new fence, not bad in my book.....
(disclaimer: this is just a rough guide to help the newbies follow my way of working it out, obviously results vary widely depending on multiple factors, always due your own due dilligence)
Hope this helps
Last edited:
wish the areas I am looking at have subdivible blocks selling ~500000
