Hi Kaylon,
I'm not too sure what size of project you are looking at doing, but there are a few things to consider.
The usual set up is with an entity – a unit trust and company as the trustee for the greatest protection. With any development the lenders will require pre-sales unless you have additional equity to use. Australian banks want blood! They will only currently lend 50% on land and 80% on construction costs and required enough pre-sales in place to cover the total debt inclusive of interest. This makes it very difficult for developers to go forward. However there is light! Overseas and local private funders we use allow greater flexibility for developments lending up to 70% on the land and 100% construction with only 50% pre sales.
Within regards to tax this is a tricky one. All developers look at the best structures to reduce tax via their accountant. For instance sake, we take units instead of profit as we only have to pay stamp duty on the transfers (from company to personal trusts) rather than GST, capital gains, company/trust tax and personal tax. You also need to discuss if it is worth while going on the margin tax scheme etc depending on size of the project.
*If your happy to travel to the south west of Sydney, i can highly recommend my accountant Peter Hawketts of Hawketts Accounting on 02 4677 0361. Mention I sent you, but please be patient as he is stupidly busy at this time but well worth the wait!
The next biggest part of any development is your consultants. YOU MUST HAVE THE BEST team around you at all times no matter of the costs, as this team can save hundreds of thousands or even millions of dollars in the long run. Again if you want some help with whom to speak to, drop me an email and i will give you their details…
The last thing i would like to say is be prepared to take a hit somewhere down the track. All developers take one at some stage in their career is just a matter of how hard you get hit and how early you detect it that makes the biggest difference. When you do, make sure you get up and keep going as this is the type of tenacity it takes to hold the line and achieve your dreams.
Wish you the best of luck
