CGT or GST on sub division and new PPOR - Mildly confused

Hello all

We are about to purchase a new property with the intention of living in the house but completing an already commenced subdivision of one into three.

We would be left with the main home and would sell the two lots upon registration which would be well within the 12 month period so we wouldn't receive any CGT discount.

Trying to work out the best entity to purchase in. We are "intending" to make a profit on the sale of the blocks but not the home.

Having done some basic numbers with apportioned land component values and development costs, it would appear that if we went the CGT way, buying it in my wife's name we would be liable to pay more tax (even though she has no PAYE income) than if I bought it in the trusts name and used the margin scheme for the two newly created lots.

I assume we would than "rent" the property back from our trust (at market rent).

I'm in the process of sourcing a new accountant as my current one and I differ in the value of his advice and time to date.

I have the company and trust structure shelved atm due no use and am just paying ASIC each year to keep them as I have a $40k loss there that I felt could be used at a later date should I ever "get back on the horse" for more property transactions....."plays sound of leather creaking as stirrups hit the saddle!"

I am off to source a new accountant Monday but thought I would ask of the good folks here if you had any thoughts or considerations that I am obviously missing.

1. Newly constructed residential premises will be subject to gst unless leased and sold after 5 years of leasing them out.

2. Properties will probably be subject to income tax not cgt as they are profits from an isolated transaction or you have had history of developing. Will depend a lot on your involvement in the process.

3. As you expect profits having them in the trust would allow you to utilise the losses.

4. Maybe consider a dt and wife as tenants in common. Wife holds 1/3 as tenants in common with intention for ppor to remain with her. Dt holds 2/3 with remaining 2 units to utilise the losses. Will provide stamp duty savings aa opposed to having in one structure and transferring the ppor to the wife. If in nsw trust would be subject to land tax so might not want the property which is your ppor in the trust.
Thanks Mike

I won't be constructing any new buildings just living in the existing one.

I have done three other subs and project managed them hence looking at buying in my wife's name with just finance in both names with my company providing project management services if that will fly with the ATO.

Or simply buying in the trusts name and also project managing it for further income and using the margin scheme for GST.

I plan on phoning your Sydney office Monday morning (having researched other recommendations re accountants on these forums) to organise a meeting if you are still taking on new clients.

Edit: SOLD! Awesome advice re TIC. I'll be in contact Monday. Really appreciate the help.

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No problem. Will be closed on monday for the public holiday but will be around tuesday so give us a buzz and can help you out.

will need to consider whether completing the properties are substantial renovations and subject to gst. Interesting one to discuss. Ill have a look at the ruling before we talk to see whether this would affect you.
For the record I was going to say similar to coasty. You might need a deed of parition so tjat once sub division is complete you can split titles with nominal stamp duty