Dual occupancy

R

Ramos023

Hi guys just a quick question! Been receiving mixed answers from family and friends so I thought id ask here!

Sister has a 850m2 block and has been council approved for dual occupancy! Apparently the land is not big enough to sub divide ( it needs to be 900m2 ) so I was planning on building the second dwelling with my funds and want it to be in my name upon completion. I have come to an agreement with her in regards to paying her on the side cash for the land.

It will be sharing a drive way as per the plans - so common property. I am asking was is the best way to go about this? Upon completion can I strata title it in my name? Or is there a better way? Caveat etc?

Not only for asset protection but for tax and legal purposes! ie : will it add to my land tax, as I didn't purchase the land as it was not sub divided....

Has anyone had experience with this i'd love to hear your opinion! The dwelling will be in Wollongong if that matters for regulations etc compared to other states whathaveyou
 
I would start with the town planning section of the relevant council.

They will be able to tell you what you can and can't do with the zoning laws.
Marg
 
Ramos023 said:
Sister has a 850m2 block and has been council approved for dual occupancy! Apparently the land is not big enough to sub divide ( it needs to be 900m2 ) so I was planning on building the second dwelling with my funds and want it to be in my name upon completion. I have come to an agreement with her in regards to paying her on the side cash for the land.

It will be sharing a drive way as per the plans - so common property. I am asking was is the best way to go about this? Upon completion can I strata title it in my name? Or is there a better way? Caveat etc?

Not only for asset protection but for tax and legal purposes! ie : will it add to my land tax, as I didn't purchase the land as it was not sub divided....

Has anyone had experience with this i'd love to hear your opinion! The dwelling will be in Wollongong if that matters for regulations etc compared to other states whathaveyou
Click to expand...

I have just completed something similar. We purchased a house and lodged a DA for a dual occupancy which was staged as follows:
Stage 1 - Vacant lot Strata subdivision
Stage 2 - Construction of second dwelling

If you can do it this way your sister can sell you the vacant strata lot and you can go ahead and build the new home with your funds. You won't pay any stamp duty if you build within the first 6 months after settlement. Your sister will be up for gst on the sale I would say - plus income tax on the profit. There may be some other way. Not sure if you can do deed of partitioning since it is within the family? A property lawyer may be able to answer this. Post in the legal issues forum area to find out. I've heard a guy from Chan and Naylor talk about this on Real Estate Talk.

As far as land tax goes the original land value will be halved between lot 1 and 2. So if the original land value is 200k your assessable portion will only be 100k. For this reason strata subdivisions are less of a burden for land tax.

No issue with sharing the driveway as long as council are ok with it.
I would be very careful about shifty cash transactions. Not worth the trouble. There should be plenty of cream in a simple dual occ build. Steer clear of difficult sites to build on unless they have great views, etc.
 
"Strata title after completion and purchase 1 unit from her "
how does this work? Ill be the one building the villa so I don't want to pay twice.... or am I missing something
 
"If you can do it this way your sister can sell you the vacant strata lot and you can go ahead and build the new home with your funds"

say I go this way - ill be in a dilemma as I am buying the land at a discount
ie say its worth 200k and im buying a strata S/D lot it would be 100k theyd want to see? but im paying her less by far as part of an agreement

does that make sense
 
Ramos023 said:
"Strata title after completion and purchase 1 unit from her "
how does this work? Ill be the one building the villa so I don't want to pay twice.... or am I missing something
Click to expand...

In my shire - Byron Bay - You can do a vacant lot strata subdivision. The existing house and the new vacant land area are seperated into 2 individual titles + a 3rd title which is the strata title that indicates common property, and lot apportionment (eg: Lot 1 - 50%, Lot 2 - 50%) The strata title receives a number which takes over the original Lot and DP number. Once the strata subdivision is registered your sister is free to sell either her house or the vacant lot (with approved house plans). It's a lot like a full subdivision except less work since you don't have to create a new power and sewer connection. The new house can just tap into the existing sewer and power supply at the street. The new vacant lot will require its own water meter which often requires a new tapping unless water pressure and flow rate are high enough from the existing service line.
 
Ramos023 said:
"If you can do it this way your sister can sell you the vacant strata lot and you can go ahead and build the new home with your funds"

say I go this way - ill be in a dilemma as I am buying the land at a discount
ie say its worth 200k and im buying a strata S/D lot it would be 100k theyd want to see? but im paying her less by far as part of an agreement

does that make sense
Click to expand...

You can pay her what you want but family transactions may require a valuation from a professional to ensure you are contributing fairly to stamp duty - although this would not apply if you are planning to build within the 6 months. It may be worth an anonymous call to Office of State Revenue to find out if your sister can sell it to you below market value. If you want to know the real value just ask a RE agent. Even though the Land tax component may be 100k it doesn't mean it is worth that. Actual fact is that it is probably worth closer to 200k since you are creating another house site.
 
Ok thank you! Im not sure if its different here so ill have to look into it furthermore.

Apparently my understanding was that it isn't big enough to subdivide ( council ) but can be used for dual occupancy (approved) . I guess this is where my confusion comes from! Subbing makes sense - I buy the subbed off lot and pay Stamp Duty etc etc she pays tax on profit whereas strata SD is above my beginners level of knowledge
 
Ramos023 said:
Ok thank you! Im not sure if its different here so ill have to look into it furthermore.

Apparently my understanding was that it isn't big enough to subdivide ( council ) but can be used for dual occupancy (approved) . I guess this is where my confusion comes from! Subbing makes sense - I buy the subbed off lot and pay Stamp Duty etc etc she pays tax on profit whereas strata SD is above my beginners level of knowledge
Click to expand...

I am keen to know how the strata titlings work too. Subdivision is often not allowed due to the size of the land and hence although council views a dual occupancy as simply a big house they wont then allow it to become subdivided and be owned by two different people.
 
Strata title is a type of subdivision but there must be at least one house existing on the land. You can't strata subdivide vacant land into smaller lots of vacant land like a standard subdivision. In our shire a strata subdivision can be done on minimum lot sizes of 800sqm but a full subdivision requires a 1200sqm block as a rule. Variations can be requested under certain circumstances.

Ramos, you can of course build the new dwelling first and do the strata subdivision second. This is the simplest and most common way to do it and less cost is involved.
Stage 1 DA approval for dual occ
Stage 2 Construction
Stage 3 Strata subdivision
 
thanks rockstar that's basically how I am going to do it - worst case scenario I build it and have a brand new villa that I can live in :)

the only thing I was checking was that I build it on my sisters land ( in her name ) that the only cost is then the strata SD fees ( I understand about water connection etc counting as part of my construction budgets ) and not that I have to purchase it off her as I built the freaking thing haha ... and I like the help I got that stamp duty is avoidable if construction begins within 6 months thanks
 
Ramos023 said:
this is where I am confused... why would I purchase it when I built it! and paid for everything
Click to expand...

You haven't paid for the land. Are you expecting this for free? Remember that your sister is devaluing her own property to some extent and giving you a very easy way in. That's all good if she is happy to do so and would be very kind of her.
I'm a bit confused about your expectations. Maybe you don't want to own it but just want the rights to live in it for a long time?

Please explain? :)
 
Rockstar said:
You haven't paid for the land. Are you expecting this for free? Remember that your sister is devaluing her own property to some extent and giving you a very easy way in. That's all good if she is happy to do so and would be very kind of her.
I'm a bit confused about your expectations. Maybe you don't want to own it but just want the rights to live in it for a long time?

Please explain? :)
Click to expand...

Not for free but im giving her the amount she asked for knowing well she was devaluing the front property as such. She needed a certain amount and said that was a condition of me building - yes its lower than market value but she doesn't have the capacity to build and is more interested in the family side whereas I want to learn more and get into this type of work possibly one day.

As the land cannot be subdivided ( less than 900m2) but passed for dual occupancy - do we still say I bought the land at x amount ( market value ) pay any income tax etc then just put it in my name strata. Torrens is too hard, would need to redraw the entire plans and do a new driveway so the back was exclusive not shared property.

Im just out of my depths abit, lady at the council didn't give me a clear answer. Might have to call into my solicitor next day off
 
Ok that's all good. Yes, I would be talking to your solicitor as well as your accountant. Make sure you are both clear on the process and the outcome. You are making a substantial investment so need to be protected from unexpected circumstances.
Has council told you what your Sec 94 contributions + sewer and water charge will be for creating the dual occ? Mine are normally around 30k for an extra 3 bedroom house.
 
I don't understand how council has said no to subdivision but you talk about strata titling the second dwelling. Isn't strata title a form of subdivision, since another title is being created?
 
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