Hi Guys,
Hoping there are some Accountants out there who may be able to help clarify something for me, I'm trying to get a 2nd/3rd opinion to confirm what I have been told from my Account.
Basically I am planning to develop my property and build 3 Units on it. My idea was to hopefully develop the property and keep the front Unit for my family and sell the Units 2 & 3 straight away so I can then pay off all my debt and hopefully have a little bit of money left over.
However, what my Accountant told me was because I plan on selling them straight away, it counts as a business or something and I would be hit with an approx $58,000 GST bill which I can't offset anything against, so it'd be a straight tax. This was a massive surprise to me because I didn't know GST had to be paid on Developments off the plan for the Developer to pay and this basically renders my project probably not worthwhile doing as I could possibly sell the property with plans and get a similar amount.
From memory he told that if I hold onto the Units and then sell them after 12 months though they wouldn't be applicable to GST but then I would need to pay CGT tax on them if they sell them after that at my marginal tax rate etc.
Are there any Accountants who may be able to help me out with information please? I'll provide some basic numbers below which may or may not be useful-
PPR Value with Plans - $400,000
Loan Owing - $50,000
Build Cost - $550,000 (Approx)
Incidentals - $50,000
Legals - $15,000
Interest - $40,000 (Approx)
GST - $58,000 (If this is confirmed I need to pay if selling straight away)
Unit 1 Value - $390,000
Unit 2 Value - $375,000
Unit 3 Value - $350,000
I'll do anything possible to make the numbers stack up whether it means I have to keep and sell after 12 months to avoid the GST or anything else. I also have around $50,000 of Capital Losses accumulated from sharemarkets losses in the future so I believe I can offset this against any future Capital Gains is that not right? Hence my theory is I may keep for 12 months and then sell so I can offset my losses against the gains and still hopefully come out on top although I know I'll be working for the Bank during that 12 months as the interest will be very high and also my Units then won't be brand new but 12 months old so hopefully they won't take a hit in value.
Please Help guys, I'm desperate! TIA
Hoping there are some Accountants out there who may be able to help clarify something for me, I'm trying to get a 2nd/3rd opinion to confirm what I have been told from my Account.
Basically I am planning to develop my property and build 3 Units on it. My idea was to hopefully develop the property and keep the front Unit for my family and sell the Units 2 & 3 straight away so I can then pay off all my debt and hopefully have a little bit of money left over.
However, what my Accountant told me was because I plan on selling them straight away, it counts as a business or something and I would be hit with an approx $58,000 GST bill which I can't offset anything against, so it'd be a straight tax. This was a massive surprise to me because I didn't know GST had to be paid on Developments off the plan for the Developer to pay and this basically renders my project probably not worthwhile doing as I could possibly sell the property with plans and get a similar amount.
From memory he told that if I hold onto the Units and then sell them after 12 months though they wouldn't be applicable to GST but then I would need to pay CGT tax on them if they sell them after that at my marginal tax rate etc.
Are there any Accountants who may be able to help me out with information please? I'll provide some basic numbers below which may or may not be useful-
PPR Value with Plans - $400,000
Loan Owing - $50,000
Build Cost - $550,000 (Approx)
Incidentals - $50,000
Legals - $15,000
Interest - $40,000 (Approx)
GST - $58,000 (If this is confirmed I need to pay if selling straight away)
Unit 1 Value - $390,000
Unit 2 Value - $375,000
Unit 3 Value - $350,000
I'll do anything possible to make the numbers stack up whether it means I have to keep and sell after 12 months to avoid the GST or anything else. I also have around $50,000 of Capital Losses accumulated from sharemarkets losses in the future so I believe I can offset this against any future Capital Gains is that not right? Hence my theory is I may keep for 12 months and then sell so I can offset my losses against the gains and still hopefully come out on top although I know I'll be working for the Bank during that 12 months as the interest will be very high and also my Units then won't be brand new but 12 months old so hopefully they won't take a hit in value.
Please Help guys, I'm desperate! TIA
