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.