Changes in Purpose
Typically, property developers will aim to structure a property development with one of three desired outcomes in mind:
develop, and sell all;
develop, sell some, and retain the rest;
develop, and retain all.
Where this intention is known prior to undertaking the property development project, the legal structure and funding arrangements can be planned out well in advance to ensure the success of the desired outcome is optimised.
Complexity arises however when a property developer has a change in intention partly through the property development. Whilst this may arise as a result of personal preference, it is typically as a response to changes in market conditions (both positive and negative), changes in council policy, zoning or FSR, business performance, or demands from third parties (creditors, banks) or investors. When such change occurs, the level of risk can develop and whilst many property developers are well-versed in the immediate economic considerations, those that fail to obtain specialist advice typically find themselves running into lesser-known income tax, tax planning, GST or stamp duty hurdles that catch them off-guard.
This article includes:
Capital v revenue
GST and residential property
Clawbacks of exemptions for foreign persons of surcharge purchaser duty and land tax
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