Here is the correct details:
Black v Garnock (2007) HCA
http://www.hcourt.gov.au/registry/matters/JanFeb07/Black-Garnock.pdf

Darren

Depends who owns them.

Assuming one entity (trust/company/all of you) owns the block.
GST
Construction and Land costs = $800,000 . GST paid = $80,000 approx (maybe no GST on land)
Selling costs = $1,200,000 GST charged = $120,000
Net GST shortfall = $40,000

CGT
Sale price = $1,200,000
Cost = $800,000
Profit = $400,000

From this you can deduct buying and selling costs such as legals, agents fees and other costs.
Then, if you have held the land more than 12 months, you may be able to get the 50% CGT discount.
So $200,000 CG approx (assume other costs zero for now)

If a discretionary trust, then this profit would be distributed to beneficiaries who pay tax.
If you all jointly owned it, you would get $$66,000 added to your income, so you would pay a max of 46% or so tax on this = $30k (ea).

This is very rough and probably you would end up paying much less.
Also have to take into account interest on the loan while building etc and many other costs.

Please see an accountant before you sign any contracts or you could be setting yourself up to pay more tax.

Scamp,

Average wage across Australia is now $1147 pw
http://www.smh.com.au/news/national/average-weekly-wage-now-1147/2008/11/13/1226318805478.html

Average wage in Sydney is probably higher.

Hi Pete

a) Directors will always be required to sign guarantees. Having one cuts down on the risk if something goes wrong and cuts your exposure to the banks. Beware, some banks may ask guarantees from shareholders too. So I would have one director only. But bear in mind if the director's income is low you may need the help of the spouse to guarantee too – this should be able to be done without them being director.

b) You are basicially buying from yourself, so it can all be done at settlement. eg Trust buys $400,000 property, loan is $350,000. Your loan is currently $340,000. When you settle you will have $60,000 left over. $50,000 goes to the trust. Your solicitor can help you with the conveyancing side. Its all done simulataneously.

c) The trust may have a cash profit, but still have a tax loss. What happens here I think depends on your trust deed's wording. For tax returns I think it would be only the taxable income that is distributed but your trust would still have cash left over. I am not sure now what would happen, but think there are different ways to calculate income.

d) Under the Corporations Act (2001) section 126, the company can authorise an agent to act on its behalf.
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s126.html
But a bank may not accept this.
You may also want to set up a power of attorney with your partner. You will then be able to sign on her behalf. But be careful. Banks will probably insist on the director/guarantor seeking independent legal adivice before settlement. So they may not accept power of attorney at this stage.

I think you have good chances of buying properties. Whether they will increase in the near future is a different matter.

One problem you may have is how do you qualify for a loan to release the equity in the first place as you stated you are on a pension.

It is rather unusual to pay $50k more than asking price. Especially in this market where there are supposed to be less buyers out there. Will the valuation come in that high?

At the very least I would not go ahead until the bank has done their valuation. So make sure you have a finance clause in there. I would also do a lot more research. Generally it is the land that appreciates in value and the building that goes down in value, but units can be still a good investment.

yes, normal rental principles apply.

Why not do both. Get constructing and buy some investments as well. Once you have finished construction you can sell and do again or mortgage the house and release some cash for the next ones- bear in mind it is getting harder to release cash these days.

st g currently offer 1.50% off the svr fir the first year.

bankwest 0.90% off the average of the 4 major banks svr for 3 years. no exit fees either

I am not sure – but why use them? What is the rate and the exit fees?