In my quest to increase our holdings and rental income, one idea I have is to take the two houses we hold (two street access) and split each block into two and build a house in the back of each block.
We would effectively be building on "free" land. It would mean we borrow more money but the rent coming from four houses would mean more money in our pocket, even taking the increased loan into account.
Both houses are in hubby's name, and he pays a good chunk of land tax already.
I've done a bit of research and know we "could" sell to a builder/developer but we aren't being swamped with offers. We really don't want to sell anyway, and prefer to hold the houses for the rent they bring in. A builder/developer would want the land cheap enough to ensure a good profit and we want a good price ourselves.
I'm not that keen in trying to put four townhouses on ourselves and prefer the idea of two stand alone houses. I believe (and have been told by an agent) that stand alone houses will sell more easily and will be much easier to get approval for over four townhouses and the overlooking, shadowing, privacy, turning circle and parking issues involved.
If we turn two blocks into four, hubby's land tax will increase substantially due to each block being worth more than half the current blocks.
My idea is that I buy one of the blocks from him (at worst this should cost me $20K in duty or thereabouts - I will investigate whether I can do this for less).
This would result in me holding two "new" smaller blocks and hubby holding two smaller blocks. The government gets their duty from the transfer and going forward our land tax is substantially reduced.
It means we also pay capital gains tax on the gain he makes when he sells to me, but the upside is that the base cost is reset at the new higher amount, and any capital gains tax I may down the track on sale, is calculated from that new figure.
I'm happy to run with this idea if the figures work, but wonder if I'm missing something?
I "could" start a trust to hold rather than my name, but I wonder if that is necessary? I believe there is no land tax threshold for a trust (but I'm not sure). Would this mean I'm better to hold in my own name?
We would effectively be building on "free" land. It would mean we borrow more money but the rent coming from four houses would mean more money in our pocket, even taking the increased loan into account.
Both houses are in hubby's name, and he pays a good chunk of land tax already.
I've done a bit of research and know we "could" sell to a builder/developer but we aren't being swamped with offers. We really don't want to sell anyway, and prefer to hold the houses for the rent they bring in. A builder/developer would want the land cheap enough to ensure a good profit and we want a good price ourselves.
I'm not that keen in trying to put four townhouses on ourselves and prefer the idea of two stand alone houses. I believe (and have been told by an agent) that stand alone houses will sell more easily and will be much easier to get approval for over four townhouses and the overlooking, shadowing, privacy, turning circle and parking issues involved.
If we turn two blocks into four, hubby's land tax will increase substantially due to each block being worth more than half the current blocks.
My idea is that I buy one of the blocks from him (at worst this should cost me $20K in duty or thereabouts - I will investigate whether I can do this for less).
This would result in me holding two "new" smaller blocks and hubby holding two smaller blocks. The government gets their duty from the transfer and going forward our land tax is substantially reduced.
It means we also pay capital gains tax on the gain he makes when he sells to me, but the upside is that the base cost is reset at the new higher amount, and any capital gains tax I may down the track on sale, is calculated from that new figure.
I'm happy to run with this idea if the figures work, but wonder if I'm missing something?
I "could" start a trust to hold rather than my name, but I wonder if that is necessary? I believe there is no land tax threshold for a trust (but I'm not sure). Would this mean I'm better to hold in my own name?
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