Subdivision newbie! - Large scale dev.

[djmatt24]

Hi all!
My family (2 parents, 3 adult working children including myself), have owned and lived on a 10,000m2 property in Sunnybank Hills area (Brisbane) for 30+ years, and the parents are now starting to test the waters for selling or developing the land.
The land has a large house on it in one corner (family home) taking up about 2,500m2. Another small old house in the middle which needs demolishing.
Having talked to a family accountant about the possibilities of development for renting, we were told that a huge chunk would be lost to income tax as we were 'intending to profit' from the land. We need to understand the tax issues better. The initial costs are also large - connecting services and building a street. It's very early days. Please give me your 2c worth - what would you do?
The options as they are:

- Sell everything, land + house (easy + quickish)
- Sell land, keep house (not favoured by retired parents as they don't want years of construction noise)
- Sell the house and use the $ to develop the land ourselves (rent or sell? Tax issues? Risks?)
- Another mystery option???

 

[thatbum]

Firstly, I would only worry about tax after you have done the figures. Have you crunched the expected numbers?

Its weird write off options because of tax before you even know what sort of numbers you're looking at.

 

[HD_ACE]

Hi all!
My family (2 parents, 3 adult working children including myself), have owned and lived on a 10,000m2 property in Sunnybank Hills area (Brisbane) for 30+ years, and the parents are now starting to test the waters for selling or developing the land.
The land has a large house on it in one corner (family home) taking up about 2,500m2. Another small old house in the middle which needs demolishing.
Having talked to a family accountant about the possibilities of development for renting, we were told that a huge chunk would be lost to income tax as we were 'intending to profit' from the land. We need to understand the tax issues better. The initial costs are also large - connecting services and building a street. It's very early days. Please give me your 2c worth - what would you do?
The options as they are:

- Sell everything, land + house (easy + quickish)
- Sell land, keep house (not favoured by retired parents as they don't want years of construction noise)
- Sell the house and use the $ to develop the land ourselves (rent or sell? Tax issues? Risks?)
- Another mystery option???

Risk + Effort Vs Reward.

I do not see any $$$ figures in there to be able to comment on feasibility.

How many lots can it be divided into?
Cost to do this. Value of lots.
Cost to build on each lot and end values?
Timeframes to do the above.
Holding costs.
Income tax and gst if selling?

Your accountants comment about income tax when developing to rent out is very strange indeed. Intending to profit and creating an income are two different things.

Some times the simplist things are the best so look into the option of selling with DA.

Also be aware of loosing cgt exemption on all the above scenarios so proper advice is needed.