Accountants for property developers and investors
Property tax turns on a few decisions made early, often before the contract is signed: whose name the property goes in, whether it is held as an investment or developed for profit, and whether GST applies when it is sold. Get those right and the CGT discount, the margin scheme and the land tax thresholds work for the owner. Get them wrong and the same property can be taxed as ordinary income, with GST on the full price and a land tax bill nobody modelled.
New Wave works with property investors building a portfolio, first-time developers doing a duplex or small subdivision, and established developers with several projects, across the Gold Coast and Australia. Agencies and builders have their own pages on real estate and property management and construction.
The questions developers and investors bring us
Revenue or capital
A property bought to develop and sell is usually trading stock or a profit-making venture, so the profit is ordinary income with no CGT discount. A property held to earn rent is usually a capital asset, and individuals and trusts that hold it for at least 12 months get the 50 per cent discount. The answer turns on the intention at purchase, so we record it on day one and choose the entity to match.
GST, the margin scheme and withholding at settlement
Selling new residential premises or subdivided lots is generally a taxable supply for a GST-registered developer. The margin scheme can reduce the GST to one eleventh of the margin rather than the full price, but only if the land was acquired in a way that allows it and the buyer agrees in writing before settlement. Buyers of new residential property also withhold part of the price at settlement for the ATO, after written notice from the developer. GST credits on development costs are claimable while the project is built for sale, and an adjustment applies if unsold stock is rented out.
One entity per project, or a joint venture
Developers commonly run each project through its own company or unit trust, keeping its finance, risk and profit separate. Where a landowner and a developer or several investors combine, the choice between an unincorporated joint venture, a unit trust and a company changes who registers for GST, how profit is taxed and how each party exits. We set up the structure before the land is bought and model the project’s cash flow and feasibility in a form a lender will accept.
Land tax and the holding structure
In Queensland, land tax is assessed on the total taxable value of land each owner holds at midnight on 30 June, and companies and trusts have a lower threshold than individuals. The other states each run their own land tax. A discretionary trust can protect assets and spread income, but losses stay in the trust and the threshold is lower, so structure, finance and land tax are worked out together.
Property in super
An SMSF can own commercial property and lease it to the members’ business at market rent. It can buy residential property only from unrelated parties, and members and their relatives cannot live in it or rent it. Money borrowed under a limited recourse borrowing arrangement can buy or repair a single asset but not improve or develop it. New Wave SMSF sits in the same building, so the fund is planned alongside the rest of the structure.
What the work looks like
- A designated team that handles each project entity, the holding trusts and companies, the owners’ personal entities and the SMSF together, on one monthly package agreed up front.
- Bookkeeping in Xero by project, tracking land, construction, finance and GST against the feasibility.
- Tax planning in May with real numbers across every entity, not a tax return in October.
- Annual review of the holding structure, land tax and the revenue or capital treatment of each property.
- Advisory for the next move: the next site, a joint venture, a refinance or a sale.
Who we work with
Property investors and family trusts, developers of duplexes, townhouses and subdivisions, commercial and mixed-use developers, and landowners in joint ventures, across the Gold Coast, Brisbane and interstate.
Getting started
Book a FREE discovery call, 30 minutes with a New Wave team member. Bring a list of the properties, who owns each one and any project you are planning. If it is a fit, a proposal follows within the week with the monthly package set out.