My brain is going round and round without getting good answers….Any ideas??
My story is I own two blocks side by side. One block I developed with four villas which I have held and rent out (not strata titled) Next door block has old house which is to be demolished and DA has just come out for nine two storey townhouses which will share the driveway with the four villas adjacent. These I will strata title.
Plan is to do a joint venture type arrangement with son-in-law who is the builder and my intent is to hold five of the townhouses and rent them out while son-in-law takes four.
This is where it gets tricky. We each have some equity in other properties enough to fund approx two thirds of the project but need to borrow against the land &/or project to get remaining funds (which I am working on).
I can’t get my head around the ownership issues and CGT and GST.
Have considered trusts, companies etc and would prefer to keep it simple as possible while minimising taxes. Latest plan is for me to sell the block to a partnership that we create together, so the partnership can borrow against the land/project.
We’ll both contribute 50:50 to the partnership and the project and split any profit. The sale of land to the partnership and then the sale of the five completed townhouses back to me and the other four to son-in-law would both be CGT events as far as I can work out so would I be paying CGT twice??
Also Stamp Duty to pay both times. As far as GST goes I’m getting completely knotted…I’m not registered for GST, son-in-law is, partnership would be, new residential properties selling from partnership back to us, but land really was mine anyway in the first place, and I’m holding them and renting!??...
Then there is the borrowing the funds to build, then having funds to buy back off the partnership and paying off the original loans and ending up with five townhouses with loans about 60%LVR. Or is the sale back to me just done on paper??...more knots…
Anyone have any thoughts? I just want to realise the asset in the simplest and best way possible and end up keeping as much of it as I can i.e five townhouses, maybe sell one or two down the track if and when I need to.
Is there a simple model I can follow while minimising costs??
Any ideas appreciated.
Andy
My story is I own two blocks side by side. One block I developed with four villas which I have held and rent out (not strata titled) Next door block has old house which is to be demolished and DA has just come out for nine two storey townhouses which will share the driveway with the four villas adjacent. These I will strata title.
Plan is to do a joint venture type arrangement with son-in-law who is the builder and my intent is to hold five of the townhouses and rent them out while son-in-law takes four.
This is where it gets tricky. We each have some equity in other properties enough to fund approx two thirds of the project but need to borrow against the land &/or project to get remaining funds (which I am working on).
I can’t get my head around the ownership issues and CGT and GST.
Have considered trusts, companies etc and would prefer to keep it simple as possible while minimising taxes. Latest plan is for me to sell the block to a partnership that we create together, so the partnership can borrow against the land/project.
We’ll both contribute 50:50 to the partnership and the project and split any profit. The sale of land to the partnership and then the sale of the five completed townhouses back to me and the other four to son-in-law would both be CGT events as far as I can work out so would I be paying CGT twice??
Also Stamp Duty to pay both times. As far as GST goes I’m getting completely knotted…I’m not registered for GST, son-in-law is, partnership would be, new residential properties selling from partnership back to us, but land really was mine anyway in the first place, and I’m holding them and renting!??...
Then there is the borrowing the funds to build, then having funds to buy back off the partnership and paying off the original loans and ending up with five townhouses with loans about 60%LVR. Or is the sale back to me just done on paper??...more knots…
Anyone have any thoughts? I just want to realise the asset in the simplest and best way possible and end up keeping as much of it as I can i.e five townhouses, maybe sell one or two down the track if and when I need to.
Is there a simple model I can follow while minimising costs??
Any ideas appreciated.
Andy