young newbie planning triplex development/block with 3 titles

hi,

long time reader, first time poster.
young kid seeking help from the brains trust that is somersoft:D

A little background:

When i was 18/19 i bought myself my first house for an undervalued 200k:eek:, nothing special, 3 bed brick house needed a little work.The draw-card of the property it has 3 titles of land on it. The block itself is 720 sqm.

Fast forward 5 (hard) years currently valued @ 340k. I owe roughly 30K atm.
After speaking with the council town planner, and looking into triplexes, I found I could build 3 dual occ dwellings(triplex).

I have crunched some numbers and done my homework(to the best of knowledge) and its seems to have good margin (roughly 25-30%).But there are still some things i'm unsure about.

My questions are:

1) the current house is a PPOR, if i construct a triplex. i would assume when i erect 3 structures that i can claim one as PPOR? is this true?

2) I plan to keep one or two to rent out, must i keep them 5 years to not pay GST?

3)Can i sell them one by one over a period of time say ( yr 1 triplex 1, yr 2 triplex 2, yr 3 triplex 3) and claim them as PPOR's to minimize capital gains?

4)in regards to capital gains tax which i may have to pay, the house came with three titles do i divide base cost 200k/ 3 to account for CGT?

sorry i should have dipped my toe in before jumping in, but the water looks nice.

any advice/tips would be very welcome.

thanking everyone in advance.
 
books

I'm not an expert but having read a few books my opinion is...
1. Yes
2. Yes
3. You can only have one PPOR at any one time so, at best, you could get proportional CGT exemption split by time spent vs time rented so you couldn't get total exemption.
4. Don't know.

The other thing to check right at the start is if you can get finance to build that much at once.
 
thanks for your reply. .

the finance part is ok, my job has a steady income and I've been in contact with bank/ loans dept and they seem accommodative to my proposal(thus far).

just another question- does the 5 yr GST rule apply to the PPOR aswell if i decide to sell it after a few months?

input from people who have undertaken similar projects(duplexes/triplexes) would be great.

i.e. what to expect, whether it was a steep learning curve. anything. I just wanna arm myself with as much knowledge as i can.:confused:

cheers everyone.
 
Well my understanding is that if you plan to build them as an investment proposition you will not be liable for gst at all. ie: you are not acting as a developer who would be building and selling immediately. As long as you hold them for more than 1 yr you can then do what you like with them hold or sell. If you sell one off after 1 yr you will only be liable for tax on 50% of CG. Any interest on loans to fund the construction would be fully deductable.
What I am not sure of is whether you could sell one or two off immediately since you have owned the property already for more than 1 yr? Have you been claiming any % of your current interest repayments on the property. Since you have 3 titles you would think that at least two of them would be considered as IP's - the other being your PPOR? I would pose the question to the Accounting and Tax section of this forum. :)
 
Top