Hi all,
I have a bit of a dilemma and need some advice from my fellow SS team. I am in the process of purchasing 2 properties in Melbourne from the same vendor. One is a house and one is a vacant block of land. The purchase is a private sale so no agents are involved. My plan is to rent out the existing house and build 2 units on the vacant block in the next 12 months, which will also be rentals. I don't have plans to sell any of the properties at this stage, but who knows what my circumstances will be in 5-10 years time.
Anyway, the properties are on 2 titles but the vendor is insisting on having a single sales contract. I would prefer to have 2 contracts but the vendor refuses as this will trigger capital gains tax for her on the vacant land. So I only really have one option - purchase both on one contract.
Does anyone have any experience doing this? What is the best way to finance this, i.e. one loan or two? If two, I assume that both properties will be valued independently. This should be interesting given than I'm buying under market value. Or should I just have a single loan and split it later one when it comes time to build the units? Having a single loan might be problematic though because the mortgage interest on the house will be tax deductible whereas the interest on the land won't be (?)
Are there any other tax implications I need to consider? Say I do eventually sell the units or house, how will CGT be calculated? Will it be based on valuation at time of purchase? For this I presume I would need an independent valuation at time of purchase.
I only have a day or two to sign the contract so not much time. I have called my accountant but he is tied up until next week Any advice/feedback would be appreciated.
Thanks
Ozi
I have a bit of a dilemma and need some advice from my fellow SS team. I am in the process of purchasing 2 properties in Melbourne from the same vendor. One is a house and one is a vacant block of land. The purchase is a private sale so no agents are involved. My plan is to rent out the existing house and build 2 units on the vacant block in the next 12 months, which will also be rentals. I don't have plans to sell any of the properties at this stage, but who knows what my circumstances will be in 5-10 years time.
Anyway, the properties are on 2 titles but the vendor is insisting on having a single sales contract. I would prefer to have 2 contracts but the vendor refuses as this will trigger capital gains tax for her on the vacant land. So I only really have one option - purchase both on one contract.
Does anyone have any experience doing this? What is the best way to finance this, i.e. one loan or two? If two, I assume that both properties will be valued independently. This should be interesting given than I'm buying under market value. Or should I just have a single loan and split it later one when it comes time to build the units? Having a single loan might be problematic though because the mortgage interest on the house will be tax deductible whereas the interest on the land won't be (?)
Are there any other tax implications I need to consider? Say I do eventually sell the units or house, how will CGT be calculated? Will it be based on valuation at time of purchase? For this I presume I would need an independent valuation at time of purchase.
I only have a day or two to sign the contract so not much time. I have called my accountant but he is tied up until next week Any advice/feedback would be appreciated.
Thanks
Ozi