Which entity holds the project
Personal names, a company, a trust or a joint venture each change the tax rate, access to the CGT discount, land tax and how exposed you are if something goes wrong.
Property tax accountant, Northern Rivers
Projects set up properly,before the costs spiral.
Tax, GST and structures for property investors, small developers and builders taking on their own projects, from the first feasibility to the final settlement.
We know your work
Subdivisions, small developments and investment portfolios.
Most of our property clients aren’t big developers. They’re landholders subdividing a block, builders doing their own project between client jobs, families building a portfolio over twenty years, and partners teaming up on a joint venture.
What they have in common is that the biggest tax decisions get made at the start: whose name the land is bought in, whether GST registration is needed, and how profits will be shared. We help you make those decisions before the contract is signed, while they’re still easy to get right.
The questions that cost money
Four things to get right on every project.
GST and the margin scheme
New residential property is usually taxable for GST. The margin scheme can reduce the bill, but only if it’s agreed in writing before settlement.
Joint venture agreements
Who contributes what, how profits are split and what happens if a partner wants out, with the tax consequences worked out in advance.
Profit on sale versus capital gain
Whether your profit is income or a capital gain depends on your intentions and activities. It changes the tax rate and whether the 50% discount applies.
Already halfway through a project? It’s not too late to check the GST and structure.
How we help
Project by project, and year by year.
Before you buy
Feasibility from a tax point of view: the right entity, GST registration, stamp duty and how finance will be structured.
The cheapest time to get advice.During the project
BAS and GST tracking, cost records, progress claims and keeping the joint venture accounts straight.
For developers and owner-builders mid-project.At sale
Margin scheme calculations, GST on settlement, income or capital treatment and the tax return that follows.
For each lot or the whole project.Investment property
Rental returns, depreciation, negative gearing and the cost base for CGT when you eventually sell.
For investors building a portfolio.
Your accountant
Brad Tom, Partner
Brad has been a partner at TNR since 2000. He works with companies, trusts, partnerships, sole traders and self-managed super funds, and is a Chartered Accountant and registered tax agent with a Bachelor of Business from the University of New England.
Brad works with property investors and developers on structures, GST and the tax that follows each project.
Book a call with BradBecause he knows our businesses so well, we are comfortable following his advice.Dennise Simmons, Simmos Automotive Group. A TNR client for more than twenty years.
Questions people ask
Do I pay GST when I sell a property I’ve developed?
If you’re carrying on an enterprise of developing and selling property and are registered or required to register for GST, sales of new residential property are usually taxable. The margin scheme can reduce the GST payable, but only if it’s agreed in writing before settlement and the purchase qualifies.
Is my profit on a subdivision income or a capital gain?
It depends on what you set out to do and how you went about it. A one-off subdivision of land you’ve held for years may be a capital gain, while buying land to develop and sell is usually income. The answer changes both the tax rate and whether the CGT discount applies.
What is the margin scheme?
A way of calculating GST on property sales based on the margin, rather than the full sale price. It must be agreed in writing with the buyer and can only be used where the property was acquired in a way that qualifies.
Which entity should hold an investment property?
Individuals and trusts can use the 50% CGT discount on assets held for over 12 months; companies can’t. Negative gearing, land tax and asset protection all point in different directions, so the right answer depends on your plans for the property and your income.
What records do I need for a rental property?
Keep purchase and sale contracts, loan statements, rent statements, receipts for expenses and repairs, and a depreciation schedule. Good records mean every deduction can be claimed and the cost base is right when you sell.
Free 20-minute call
Talk to us before your next project.
A complimentary, confidential 20-minute call, by phone or Zoom. No forms and no obligation.
Book a 20-minute call
Or call the office on (02) 6685 6529