Structure for renovating to sell?

[Of The Vultures]

Hi all,

After the successful completion of our first renovate and sell project, we're keen to repeat this but I'm unsure as to the implications of doing this too often. So far we've purchased in the name of the lowest income earner to minimise CGT on sale.

My accountant tells me I'd be able to get away with doing maybe 1 a year without attracting attention from the ATO. But what if I want to do more than one? Would it then be considered a business and what would be the GST implications? If I had to charge GST, that could potentially wipe my profit.

What is the best way to structure something like this? Appreciate any input, thanks.

 

[Terry_w]

Hi all,

After the successful completion of our first renovate and sell project, we're keen to repeat this but I'm unsure as to the implications of doing this too often. So far we've purchased in the name of the lowest income earner to minimise CGT on sale.

My accountant tells me I'd be able to get away with doing maybe 1 a year without attracting attention from the ATO. But what if I want to do more than one? Would it then be considered a business and what would be the GST implications? If I had to charge GST, that could potentially wipe my profit.

What is the best way to structure something like this? Appreciate any input, thanks.

Even doing one reno could be a business with CGT not applying.

Generally GST would only apply to new residential buildings. 'New' is defined to include substantial renovations and there are ATO guidance documents on what is substantial

 

[Of The Vultures]

Thanks Terry. I'm only doing cosmetic renovations ie no extensions etc but I'll have a look at the ATO guidelines to be sure.

If the ATO considers me to be running a business, what would be an appropriate way to structure this? Ie companies/trusts etc? Would an accountant be the best person to speak to or do I need legal advice?

Thanks

 

[Terry_w]

Thanks Terry. I'm only doing cosmetic renovations ie no extensions etc but I'll have a look at the ATO guidelines to be sure.

If the ATO considers me to be running a business, what would be an appropriate way to structure this? Ie companies/trusts etc? Would an accountant be the best person to speak to or do I need legal advice?

Thanks

There are many ways to structure something like this. Which way is more appropriate will depend on your circumstances. Struturing is legal advice which only a lawyer can provide, but there are also tax aspects which and tax agent/accountant or a lawyer could advise on.

e.g. It may be a good idea to buy in the non working spouse's name for tax reasons, but you need to consider the legal side - succession, asset protection, family law, private loans and agreements (perhaps between spouses) etc

 

[Of The Vultures]

Thanks Terry

 

[Success]

There are many ways to structure something like this. Which way is more appropriate will depend on your circumstances. Struturing is legal advice which only a lawyer can provide, but there are also tax aspects which and tax agent/accountant or a lawyer could advise on.

e.g. It may be a good idea to buy in the non working spouse's name for tax reasons, but you need to consider the legal side - succession, asset protection, family law, private loans and agreements (perhaps between spouses) etc

Hi Terry, what would be the approx. cost of such advise ? I am in a similar situation.

 

[Terry_w]

Hi Terry, what would be the approx. cost of such advise ? I am in a similar situation.

Hi Success. I generally charge $550 for a meeting for legal advice (I am a solicitor) covering structure, asset protection and estate planning etc. Generally 2 hours long. But for clients of my mortgage broking firm I usually wave this fee.