Hey All,
I was hoping to get some advice about the situation i am in. I currently own a property with my brother (50/50 ownership) on a 650m block which was recently valued by the bank at 610k (520 land and 90k house). I live in the existing house with my wife and my brother is renting with his partner. I pay my brother an agreed rent based on current market value.
I have recently got council approval to develop a 2 story dwelling at the rear and all engineering and working drawings have been completed and the build is now out to tender. At a rough guess to complete all building works and subdivision we have allowed 350k.
Now the original plan was to complete the construction and sell the rear property (estimated 650-680) and then pay off the construction loan and with the profit I would then buy my brother out of the front property based on a valuation. Now at this stage i think it is very important to note that my brother and I are looking for the bets financial outcome, whatever that may be and whatever it would require us to do with the properties.
My concern with a sell upon completion is CGT rearing its ugly head. I am definitely going to run all this by an accountant but its always good to start by throwing it out as the users on this forum always have excellent advice
More recently however I have been thinking that what about instead of selling the property we rent it out. I anticipate on current market value we would get about $500 a week so $250 each minus other costs so about $220 a week, which over a 175k construction loan on IO would be CF+. This is where i have no idea but from my limited understanding we would also get other benefits such as depreciation.
Then with the front property we could rent it out as is and my wife and I move back closer to her parents and rent ourselves whilst we have children. This is something she really wants to do and I am happy to do that. Again if this were the case we could get depreciation on the property? Now this house would rent at around 400/200 each and my loan is about 280 so this would be CF-.
Another thing i was thinking is to possibly renovate the existing property before moving out. I have access to all trades required to do the renovation quite cheaply which would mean I could get a higher rent but it would also mean additional equity. Again though i am not sure how this would work in regards to tax?
Anyway I know there is probably a lot of missing information but I imagine this is something a lot of people have dealt with and had to consider before. Any suggestions or feedback would be greatly appreciated.
I was hoping to get some advice about the situation i am in. I currently own a property with my brother (50/50 ownership) on a 650m block which was recently valued by the bank at 610k (520 land and 90k house). I live in the existing house with my wife and my brother is renting with his partner. I pay my brother an agreed rent based on current market value.
I have recently got council approval to develop a 2 story dwelling at the rear and all engineering and working drawings have been completed and the build is now out to tender. At a rough guess to complete all building works and subdivision we have allowed 350k.
Now the original plan was to complete the construction and sell the rear property (estimated 650-680) and then pay off the construction loan and with the profit I would then buy my brother out of the front property based on a valuation. Now at this stage i think it is very important to note that my brother and I are looking for the bets financial outcome, whatever that may be and whatever it would require us to do with the properties.
My concern with a sell upon completion is CGT rearing its ugly head. I am definitely going to run all this by an accountant but its always good to start by throwing it out as the users on this forum always have excellent advice
More recently however I have been thinking that what about instead of selling the property we rent it out. I anticipate on current market value we would get about $500 a week so $250 each minus other costs so about $220 a week, which over a 175k construction loan on IO would be CF+. This is where i have no idea but from my limited understanding we would also get other benefits such as depreciation.
Then with the front property we could rent it out as is and my wife and I move back closer to her parents and rent ourselves whilst we have children. This is something she really wants to do and I am happy to do that. Again if this were the case we could get depreciation on the property? Now this house would rent at around 400/200 each and my loan is about 280 so this would be CF-.
Another thing i was thinking is to possibly renovate the existing property before moving out. I have access to all trades required to do the renovation quite cheaply which would mean I could get a higher rent but it would also mean additional equity. Again though i am not sure how this would work in regards to tax?
Anyway I know there is probably a lot of missing information but I imagine this is something a lot of people have dealt with and had to consider before. Any suggestions or feedback would be greatly appreciated.
