House & Land Development Tax Planning Opportunities

Property development has become a way for mums & dads and the like to capitalise on their big backyards, with a small property development subdivision. Those with house lots over 1000m2 have opportunities to do their own development.

Every State, Region in Australia has minimum lots sizes depending on zoning.

See:- Brisbane City Council – Selected Zones and minimum lot sizes

Zone
Zone precinct
Front lot (m2)
Rear lot (m2)

Low density residential
–
450
600

–
400 (small lot)
600

Low density residential around centres*
–
300 (small lot)
600

Character residential
Character
450
600

Infill housing
300
450

Low-medium density residential
2 storey mix
260
350

2 or 3 storey mix
260
350

Up

Most will be aware that the 2017 Federal Budget removed  depreciation on fixtures and fitting included in a   2nd hand rental property, for example – carpets, window covers, hot water services, ovens, and the like, If purchased post the 9th May 2017.

If you have owned an investment property prior to 7.30pm on 9th May 2017 (2017 Federal Budget Announcement), you weren’t effect by the changes, and as such still able to depreciate  any 2nd hand fixtures and fitting already in the property.

Opportunities  to look for in a
2nd hand properties

2018 DEDUCTIONS FOR SPECIFIC INDUSTRIES AND OCCUPATIONS

Please see below our 2018 Individual Tax deduction Checklist. You may be able to claim deductions for expenses that directly relate to your work as an employee. To claim a work-related deduction:

you must have spent the money yourself and weren’t reimbursed
it must be directly related to earning your income
you must have a record to prove it.

2018 WORK-RELATED EXPENSES GUIDES

The following guides for 2018 specific industries and occupations will help you to correctly claim the work-related expenses you are entitled to:

Adult industry workers
Australian Defence Force

New Residential Developments Contracts from the 1st July will require the purchaser to pay the GST direct to the ATO.

Why? (Phoenix Operators)

The Government wants to prevent the loss of GST contributions from “phoenix” operators.

Simply speaking, a phoenix operator would setup a company to complete a residential development project. During the development the company would claim GST refunds for land purchase and development costs on each BAS.

Once completed the company would sell the new residential premises or residential lots which will include GST in the sale price.

However, a phoenix operator would

Individual Income Tax Changes

No changes to rules around work-related deductions

Despite the publicity surrounding the high level of work-related expenses (WRE) claims, and the ATO’s strong focus on this area, the Budget did not announce any measures in that regard.

The ATO recently announced that it will be closely examining claims for work-related car expenses in 2018 tax returns.

The ATO is concerned about taxpayers making mistakes or deliberately lodging false claims in relation to work-related car expenses.

The ATO will be particularly focused on people “claiming things they’re not entitled to”.

home to work

Buying the land next door can be a great idea to expand your wings while retaining the CGT Main Residence Exemption.

We come across clients that have purchased the adjoining block of land, either at the time of the original purchase or some time later for various life style reasons (ie), building a big pool for the family, tennis court, to expand their love of gardening etc.

At the time of contemplating the sale, an obvious question that may be asked by clients :-

Is there any capital gains, and whether the main

Generally we find if a client has held an investment property for a number of years and decides to sell there is the potential for a sizable capital gain and the inevitable capital gains tax to pay.

However, we also find it is not uncommon for us when reviewing  clients’ capital gains on the sale of a:-

rental property
holiday homes
or land holding

To find cases where expense haven’t be claimed over the years of ownership due to bad advice or not realising they could claim.

Rental Property

When we review the sale of an investment

Yes, if you are carrying on a business of letting residential rental properties after the 1st July 2017.

Generally speaking passive property investor can no longer can claim travel expenses from the 1st July 2017 to:-

To collect rent
Maintain the property
Complete inspections
Attend body corporate meetings
All associated expenses for taxi, hire car costs, airfares, public transport costs, and meals or accommodations.

This also applies to partnerships and trusts.

Excluded Entities from the Changes

Companies
Superannuation funds Not a SMSF
Public Unit Trusts, Managed Investment Trust

Excludes Commercial Properties

Commercial Properties, as with Commercial Residential properties are excluded from the above

Opportunity to help family member get into the property market.

A child or grandchild may not qualify for a home loan in their own right, however the parents or grandparents don’t want to go guarantor, or want to ensure the child is able to make the commitment to purchase a property, but for their inability to gain finance in their own names.

The child may see the purchase of a duel dwelling residence as a good option, live in one, and rent the other, or rent out a second bedroom, however the

The introduction of an annual charge (called -a vacancy fee) of at least $5,500 on foreign owners of Australian residential real estate where the property is not occupied or genuinely available on the rental market for at least six months of a year.

The main provisions that govern the liability to the vacancy are contained in a new Pt 6A (s 115A to 115T) of the Foreign Acquisitions and Takeovers Act 1975 (FATA 1975).

Commencement

The vacancy fee regime applies to foreign persons who make a foreign investment application for a residential dwelling