Ideas Tax Knowledge Blog

Tax structure for undertaking property developments (2)

Written by Ideas Group | Jul 24, 2020 1:05:10 AM

 

Preferred Structures for Property Developments

While the optimal structure for a property development hinges on specific circumstances, some preferred options can be outlined:

1. Consideration of Land Acquisition:

  • If the land is already acquired, it may limit structuring options or result in unfavorable tax outcomes upon transfer.
  • Assess whether the development can be undertaken independently or requires substantial input from external parties like builders or financiers.

2. Tax Considerations:

  • Key tax issues include arguing for capital account treatment of property sales and managing GST implications.

3. Structuring without Land Acquisition:

  • If land is not yet acquired, a wide range of structuring options is available.

4. Trust Structure for Capital Account Developments:

  • If the development is likely on capital account (e.g., not intended for immediate sale), a trust is often advantageous.
  • Trusts access CGT discount and offer asset protection.
  • Discretionary trusts suit single-family ventures, allowing flexible income and capital distributions.

5. Multiple Unrelated Parties:

  • For developments involving multiple unrelated parties, a single discretionary trust might not be suitable.
  • Consider a partnership of discretionary trusts or a joint venture involving one or more trusts instead.

6. Flexibility and Protection:

  • Optimal structures provide flexibility in profit distribution and asset protection, crucial for successful property developments.

Carefully evaluating these factors and consulting with experts like Tax Ideas Accountants & Advisers ensures the selection of a suitable structure tailored to specific needs.

For queries or personalized advice on property development structures, contact Tax Ideas Accountants & Advisers at +61 2 8318 1545 or schedule an appointment through our live calendar.