Also I believe the ATO is no longer allowing depreciation on a property unless it was bought new. You would need to check this as this advice came to me second hand.
Depreciation on a property ?
Reckon capital gains tax is a bigger concern.
Thanks for all of your responses so far!
Obviously I will start to put the feelers out to the relevant people with the right qualifications, but the purpose of the OP was to see what other people have done in similar/different situations…
My brother was mentioning something to do with creating two separate loans (both with offsets/redraw) so that if one of us decides to pour more into the loan, we can then take it out to deposit purchase something else in a few years. (A la cheap shiteboxes)…
I believe if you live in a property for 6 months or more, you don’t incur CGT if/when you sell.
If you don’t, CGT does apply.
May be worth taking into account.
Think that is in the period that you sell.
I have a great Accountant; he is in Bundoora and he is a Bomber supporter. He is decidely strange, but has given us great advice and support over the last 30 years. Happy to give you his details if you want.
Hey blitzers, has anyone out there done some property development?
I am thinking small blocks of flats or
set of townhouses.
Any advice on budgeting to ensure its financially viable?
(can anyone recommend any decent online calculators to see what development costs might end up being)
That would be a huge loop hole. I think it’s 6 years as threshold for PPR.
1 Like
If you live in a place for 6 months and then move out and rent, you have 6 years before incuring any CGT on the property. Provided you dont claim any other property as your PPR.
Call it the politicians rule so they can rent in Canberra and profit on the house they bought in their electorate for the sake of getting elected.
2 Likes
Yep. Couldn’t remember the specifics but a mate is a medium scale builder who mostly does knock-down & rebuild projects.
it’s financially worth his while to move into places he builds.
As an ex-Bank Manager there are a number of things to take into account:
- Banks will lend up to 70% (some as low as 60%) of the hard costs and will ask that you put the 30% equity into the project first. This could be equity but many lenders are looking for cash contribution especially from a first time or occasional developer.
- You will need a fixed priced building contract from a reputable builder
- You may need pre-sales to cover the loan amount. 10% clear deposit from a 3rd party purchaser placed into a solictor’s trust account
- How will you cover the interest cost during the build? Most banks want the interest paid during the project although some will allow to capitalise if you have enough equity
- Have funds ready to cover a commercial valuation, soil tests, development approval, building approval, builder’s deposit
It is not easy in today’s market to arrange such finance so get ready for delays and a whole lot of stupid questions. The project may be completely viable and a market just waiting for the product but that doesn’t mean much to financiers.
I don’t think this is exactly accurate.
My understanding is that you don’t pay CGT for the period it is down as your primary residence. However, if it is your primary residence for a period, then another property is, you will need to pay CGT on the period that you own it and it isn’t your primary residence. In which case, if you’ve built up a place while its your primary residence, get it valued to lock in the increased value with no CGT. Otherwise, I think they just amortise the increases over the entire period.
Obviously not an issue if you move in, build, then sell.
This is a key element. You can only have one residence at a point in time, and therefore are only avoiding CGT on one property.
2+ year old post, but thanks.
There’s no way in hell you’d let 2 years pass before letting someone know they were wrong. 
1 Like
I know, right??
(Bookmarks a trivial Ants post for correction in May 2022.
Petty?
Me? )
1 Like
Anyone have any insights to offer up on the idea of buying a two bedroom apartment to live in but also at one point turn into an investment property?
I don’t like the new floorplans that go in apartment buildings. A cooktop in the corner is not a ■■■■■■’ kitchen and wtf ever happened to bench space? I’ve also heard they’re a bad investment. But are the ones they are 40+ years old on their last legs and about to fall apart?
Is it worth buying something to do up?
Generally they arent real great investments.
Plenty of stories of apartments bought in the last say 10 or so years, that are worth less than what was paid originally. Especially the current shoebox style, cookie cutter, large scale developments. And I know of people who bought off the plan recently, and at settlement they didn’t get the valuation they needed, and almost lost their money, so be careful. A fair bit of that is covid related though.
It’s also more likely the other way round. An older apartment, in a smaller block, in a nice area may be OK. Or maybe newer but something a bit more boutique.
They are good for lifestyle. Ultimately the real value is in land, not the building.
1 Like
Yeah, large scale developments are trash. Location matters in the sense that I’d be buying in the South Eastern suburbs, not the city. Something, say 20 years old might be ideal. No cookie cutter bullshit but not falling apart either.
depends on if they’ve had cladding issues or not too factor in a fair bit
There’s plenty of them in the suburbs too.
But yes, as always location makes a difference.
If you don’t mind me asking, why does it need to be an apartment?
1 Like