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How come tax is at 37%?
Thanks Westminster, love your work so appreciate your comments.
The location is.... yeah not telling It is a large regional and our block is well located on the CBD finge close to great facilities and transport. I just about choked when I saw the comps and there's several examples so I don't think $600k is a stretch. Of course we didn't hesitate to jump in.
I put in $10k for demo in the build costs, its a tiny 2br weatherboard, I could blow it over.
See my reply's above re contingency, beams, laundry and stairs.
Thanks
Not brave or crazy. With all the background work you have done, talking to local REAs and looking at comps, I would say sensible move. Looks like a great project and I will be following with interest.Hi all
After heaps of researching we?re embarking on our first development of 2 townhouses and thought I?d share our journey. Brave or crazy we?re not sure but here we go! Appreciate your thoughts.
Great work and congrats on starting your own project. I have been doing research on my first project as well. Haven't had any luck finding a suitable site based on my calculation, maybe I should look somewhere else. I have been focusing on areas around my because a) budget and b) proximity to my house ( i know i am lazy. ). Have you had any issues with using local builders ?Hi all
After heaps of researching we?re embarking on our first development of 2 townhouses and thought I?d share our journey. Brave or crazy we?re not sure but here we go! Appreciate your thoughts.
If you bought it with the intention to develop and sell you'll be paying income tax and not cgt, it doesn't matter if you sell it immediately or after a year. Did you get advice from a good accountant before about all this?
How have you structured the purchase?
Saw the comps too... I think however end value will be very much dependent on location/proximity to CBD.
Sounds good
Not brave or crazy. With all the background work you have done, talking to local REAs and looking at comps, I would say sensible move. Looks like a great project and I will be following with interest.
Great work and congrats on starting your own project. I have been doing research on my first project as well. Haven't had any luck finding a suitable site based on my calculation, maybe I should look somewhere else. I have been focusing on areas around my because a) budget and b) proximity to my house ( i know i am lazy. ). Have you had any issues with using local builders ?
Hi thunder,
Contributions 48k for two TH?
Really? seems like a lot..
Hi Sanj, yep am happy with our accountant, he's been with us through some complex stuff for about 10 years. In fairness to him though I've had only high level discussions and I've just recently given him a full set of my P&L.
On the topic of CGT vs income tax, we've purchased via a family trust which (as I understand it) will distribute the gain and yes we then pay income tax at our respective marginal rate. The CGT exemption applied (or not) will depend on the intention and timeframe, which will reduce that gain amount that's distributed.
Anyhoooo.... Tax is boring but necessary so my job is to make a profit and the accountant and tax man can figure out what is portion is legally Tony Abbotts
Thanks Westminster, love your work so appreciate your comments.
The location is.... yeah not telling It is a large regional and our block is well located on the CBD finge close to great facilities and transport. I just about choked when I saw the comps and there's several examples so I don't think $600k is a stretch. Of course we didn't hesitate to jump in.
I put in $10k for demo in the build costs, its a tiny 2br weatherboard, I could blow it over.
See my reply's above re contingency, beams, laundry and stairs.
Thanks
Hi all
After heaps of researching we?re embarking on our first development of 2 townhouses and thought I?d share our journey. Brave or crazy we?re not sure but here we go! Appreciate your thoughts.
We?ve purchased a small corner block (563sqm) in a regional city with an old house that has demo approval. Have been through set up of a trust structure, settlement and now working on prelim plans. Already hit a speed bump with our draftsman and dropped him like a hot potato. We?ve connected with a local builder and working with his drafty, so far so good.
The rough numbers estimated at outset:
Land $212k
Purchase Costs $32k
Build Estimate incl demo $495k
Working drawings $40k
Contributions $48k
Contingency $25k
Interest $38k
TOTAL $890K
SALE/VALUATION $1.2m
Project Profit $310k
Tax @37% $114k
NET PROFIT $196k
Attached are our draft plans, respect and appreciate your feedback.
- Our intention is to hold so tax is worst case.
- I?m expecting the contributions to be more, call me sceptical.
- Build estimate based on 2 x 186sqm (20sq) @ $1300. With the prelims in hand the sqm size is bigger than I expected would fit, so already looks tough but expect upside in the valuation at the other end.
- Sale/Valuation based on a development 500 metres down the road, sold for $600k each @ 18 squares.
- Target for this market and location is downsizers and professionals.
- Conservative rent estimate is $515 pcw each so if we have to hold should yield circa 5%.
Cheers,
Thunder
Demo costs may blow up if asbestos needs to be removed prior. I'm doing something similar to an ancient 2br weatherboard house and demo cost with asbestos removal was about 30k ballpark. Will be getting an inspection for an accurate quote later.