Subdividing and keeping both properties

Hi all,

I am fairly new here, registered a while ago but haven't had a chance to post.

I feel that I am somewhat ready to just dive in and hubby and I have been speaking about our options.

We have wanted to rebuild for ages and feel that having a 2 year old still sleeping in our room is starting to feel really wrong so we are wanting to upgrade our own home but we are also quite keen to start investing.

So our idea is subdividing our block - building two house/units where we would live in one and have the other as our first investment.

Has anyone done a similar thing, we figure the price of a build is fairly cheap and rent would definitely cover mortgage payments (obviously if rented and not vacant).

Any advice is warmly welcomed!
Where would you live while demolition / building takes place?

Seek advice on how CGT and GST would be handled.
Oh we'd be living back with my mum, so I am not stressed about living arrangements.

But yes CGT, and whether there are options for how to set up all the finance is definitely something I need to research especially because we still have a mortgage so we'd have to increase it to do the build of both places - just not sure how it's all to be set up?

An accountant can answer these types of questions?
Hi Kat,

We're in Melbourne and we do just that.

But we buy a site where the front house is ok to keep, subdivide and then build in the back.

But our current venture, we are living in the front house while we build 2 townhouses in the backyard. And we usually just keep them all.

The rents usually cover the mortgage payments of the construction costs.

A good finance broker also helps.


We started in crappy Mooroolbark, moved up to Croydon South, and now we are building in Ringwood.

I guess you start with what you can afford, and move up from there.
We think Ringwood still has a lot of potential.

But now we are considering moving to Brisbane, as our land tax bill is getting a bit hefty!

(And then we can claim a yearly holiday as a tax deduction!)
Do you move into the existing house and reno it while the new home is built on the rear or something? I've done this once in my home town and did really well out of it, but then went and used the equity for a deposit for our PPOR so am back to square one saving for a deposit again...bugger.
We try to buy a house at the front that is in decent condition.

At our current house, there was nothing to do. So we have been here for almost two years with council and bank delays, but the tractors are out the back right now.

But now with the new bank regulations for investors, we are at a standstill...
It might also be possible to apply for two dwellings on one title and subdivide down the track when it suits.

It would mean paying less in terms of land tax, rates etc. but you would need to check tax and financing implications.