Selling your home or investment property? For those who want to take advantage of opportunities in the property development space, getting started can be incredibly daunting.

However, it’s not impossible.Thinking of selling your home?  Yes, there are risks, but there are also potentially great rewards.

With a little help from experts, and a strong commitment to see it through, you can reap the rewards that Australia’s dynamic property market has to offer.

Do you have an existing property that you want to subdivide and sell? Or are you looking to purchase a property with the intention to subdivide or sell?

Here are 5 essential tips for subdividing your property from our accounting and business advisory teams:

1. Assemble your advisors

Your RSM accountant can assist you through the process in relation to tax, budgeting and cashflows, but you should access the services of other experienced advisors, such as land development consultants, real estate agents, a settlement agent, and your finance broker.

Ensuring you know the local council development limitations before you begin (such as zoning laws and minimum lot size) are essential before you begin subdividing your land.

You also need a great (and reliable) builder, and a lawyer to assist with the preparation of the building contract.

2. Work out your budgetIt’s also important to stay informed of movements in property prices and the property market in your area, and routinely update your budget if required.

How much do you plan to spend on the project? Will you be using an existing property and/or existing funds, or will you have to borrow money?

What are the application fees? What are your loan repayments? How long will your project take?

Liaising with your real estate agent will help to guide your purchase of the right property and help gain advice on the anticipated selling price (and saleability) for the final products.

As a potential buyer, you should find out the potential sale price and reserve price.

It’s also important to stay informed of movements in property prices and the property market in your area, and routinely update your budget if required.

3. Get to know your compliance obligationsWhen selling or buying a property, compliance is vital, but as it is highly complex, it’s essential to seek guidance from your accountant.

Are you an owner-builder, or just the owner?

You need to know your tax obligations, but also your legal obligations if you choose to be an owner-builder.

Your compliance obligations include:

  • Tax and GST
  • Subdivision applications
  • Insurances
  • Contractor or employee engagements

Compliance is vital, but as it is highly complex, it’s essential to seek guidance from your accountant and lawyer. 

4. Keep great recordsGood records are important when selling your property

The days of the records being kept in a shoebox are long gone.

Depending on the complexity of your development, you should consider a quality accounting software system to keep your records.

Good records make it easier to work out future cash flow, GST obligations, and profitability.

Being able to predict a project’s profit will help you make smart decisions along the way.

5. Plan your cash flow and funding.

Prepare a budget for your project. This should include:

  • Purchase costs of the propertyWhen selling your property, prepare a budget.
  • Subdivision costs
  • Building construction costs
  • Loan interest (and repayment) commitments
  • Costs of your advisors
  • Expected selling proceeds
  • GST and income tax

Engage RSM to help

At RSM, our experienced accountants and business advisors can work closely with you to:

  • Understand your compliance obligationsRSM Australia - Experienced Accountants and Business Advisors
  • Implement cloud accounting software
  • Review property purchase and sale contracts for GST implications
  • Fulfil tax, GST, and financial reporting obligations
  • Track and forecast cashflow
  • Manage bookkeeping activities

Because we have specialist expertise in the building and trade services industry, we can help you avoid many of the common mistakes and simplify your property development journey.

If you have any queries on your rental portfolio, property developments or are looking to subdivide, please reach out to your local RSM adviser today.