All Topics / Legal & Accounting / Reclaiming GST on subdivision

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  • Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 232

    Hi all,

    I am looking at buying a 750 sqm site and gaining planning to subdivide into 2.

    I may just look to sell the second land vacant or build out and sell both.

    Please can you advise the best tax effective structure to buy. Is there a way I can structure to reclaim the GST inputs on the build costs?

    Also, if I don’t build but just sell 50% of the lot is there any tax traps I should be aware of? That is,potential GST being paid on the sale land etc?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    This is something you would need specific legal advice on. It could be individual, company or trustee depending on the circumstances.

    Ownership entity won’t change the GST outcome either. Certainly GST can apply to the sale of vacant land, especially if you subdivide and sell as you will be conducting an enterprise. Have a look into the margin scheme to reduce any GST

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 232

    can a propco/opco structure be setup in australia similar to the uk to be able to deduct?

    So it makes no difference if buying in personal name or trust?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I don’t know anything about the UK

    There is no GST difference between ownership entities – in this situation, but there are a lot of other tax and non tax differences.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of propertyboypropertyboy
    Participant
    @propertyboy
    Join Date: 2008
    Post Count: 232

    what is the best structure for buying a property to subdivide then sell half the land at back and keep the front property?

     

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    It could be anything depending on the circumstances. It will depend on a lot of thing – ability to claim the main residence exemption, land tax, intention with the front property, stamp duty laws, asset protection, estate planning etc etc

    Once you determine which legal owner then you have to work out how to structure the structure. If it a company acting as trustee of a discretionary trust, then how to you fund the deposit, how about the remainder, who should be shareholder, director, terms of the trust, should the trustee be excluded as a beneficiary, should there be different capital and income beneficiaires, should default beneficiaries be included, if so what about the asset protecton issues etc

    You need specific legal and tax advice.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

Viewing 6 posts - 1 through 6 (of 6 total)

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