Property can be held as an investment or as a development opportunity. In recent years, the ability for Self-Managed Super Funds to borrow has seen a rise in small investors using their superannuation capital to invest in property.
Businesses that rely on property sales such as real estate agents and mortgage lenders are directly impacted with changes to the property market.
The focus of the property market in Australia includes:
Small investors (residential or commercial)
What we do for this industry
There are many different aspects to consider when purchasing property. Below are some of the areas we can assist you with as you go through this process:
Clarify GST requirements and assist with the calculation under the Margin Scheme
Assist with the calculations for the profitability and timing of sales
Management of cash flow during the development
The ATO generally audit the first refund for the development. We have a process for this to ensure it goes smoothly and the refund is released as quickly as possible. Generally, an audit will not be required during the development stage, as long as it has passed the first audit.
Challenges & Opportunities
There are many different taxation and GST considerations for people investing in property. GST is a challenging issue as it applies differently to each development / investment depending on the circumstances surrounding the property held.
Case study 1: Cashflow management for property development
Our client had a series of developments underway. Their management of cash flow was important, as the sale of the first stage of development needed to assist funding the second stage.
The identification of the GST treatment was the crucial first step as appropriate GST refunds were critical to cash flow for the development. A detailed cash flow budget for each stage of development was prepared not only for cash flow management but to assist in obtaining finance. Projections of profitability were calculated to ensure each stage yielded sufficient profits. These projections included a timing cost analysis for the carrying costs incurred for each month the property was not sold after completion.
Our client successfully and profitability finalised the first stage of the development and progressed smoothly into the second stage.