Maximising the returns on subdivision

[alba]

Greetings to Everyone.

I would appreciate advice and examples of what's the smartest way to subdivide or develop property. I'm planning to purchase an older house on a large block with the intention to retain the house, renovate and move into it, while subdividing the land into 3 separate titles, including the one with the original house on it.

The question I have is, would it be wiser to sell up at that stage and put the money into another similar project, or should I build the two other units, sell the original house now on a separate title and move into one of the new ones? And if I rent out the other new unit while I'm living in the other one and after a year or so I sell the one I was living in and move into the one vacated by the tenant, how would this affect the CGT situation? I live in Victoria.


Thanks

 

[BayView]

I would think that the best option is to build on the other two, then sell two of the three titles with you retaining one of the new properties as an IP.

You move to another location and rent, and the IP you retain will be close to debt free, and with maximum depreciation deductions as it is new.

Then repeat.

Or, live in the one you keep - it will be virtually debt free and you will have no rent to pay, but no tax deductions from an IP and no rent income.

This may not be the best financial choice however, but you can still use the equity you now have to do another similar project.

 

[alba]

I would think that the best option is to build on the other two, then sell two of the three titles with you retaining one of the new properties as an IP.

You move to another location and rent, and the IP you retain will be close to debt free, and with maximum depreciation deductions as it is new.

Then repeat.

Or, live in the one you keep - it will be virtually debt free and you will have no rent to pay, but no tax deductions from an IP and no rent income.

This may not be the best financial choice however, but you can still use the equity you now have to do another similar project.

Thanks L.AAussie for responding. So I suppose that in this scenario, only one of the new units will attract full CGT. I guess it would be quite cheeky to try and avoid even that by moving into it after a while (I think I read it on the ATO site that there is no minimum time requirement regarding how long do you have to live in a house for it to be your PPOR).

But then if you move into one of the new units while the other one is rented (or just vacant) for a while and then decide to move into the other new unit, and if you can do that it looks like a loophole in the system. Or is there something to stop people from doing this?