We now have sole rights to the trading names & website addresses for Moreton Bay Commercial & Moreton Bay Industrial
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Wanted fully licenced real agent for Industrial/Commercial & Business Listings
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Ben Roberts ( RECOMMENDED BY MORTON BAY COMMERCIAL )
General Manager NSW
ben@corpsure.net.au

Ben leads our National group programs, successfully acquiring schemes in multiple industries including Real Estate, Hospitality & Property. Ben joined CorpSure in 2016 after a successful 10 year stint in which he was awarded ‘National Broker of the year’, 3 years running while working for a global broker in North America.

After being our National Business development manager for 3 years, in 2019 he established CorpSure Sydney which he heads up as the General Manager. While Ben is based in Sydney, he works closely with his clients in every state & territory, visiting them frequently for ongoing support and service. Those who meet Ben quickly learn he is a people’s person who thrives on creating long-term relationships, identifying business & growth opportunities, while negotiating & maintaining extensive knowledge of current market conditions.

Contact Ben anytime to discuss your insurance needs; 0457 190 120 or ben@corpsure.net.au

Qualifications
General Insurance Tier 1
General Insurance Tier 2

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Accurate, reliable and well researched valuations are provided by Max Collins, a Certified Practising Valuer with 25 years Queensland experience, and his reports underpin every aspect of the property market, reducing risk and providing certainty in decision making.
Max Collins has undertaken rigorous tertiary qualifications with a commitment to ongoing personal development through the Australian Property Institute and provision of Professional Indemnity Insurance coverage.

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Two homes for the price of one: Is building a duplex a good investment or double the trouble?

DANIEL BUTKOVICH MAR 27, 2018
Everyone loves a great deal, which is why home builders may be tempted by the idea of getting two homes for the price of one.

Although it costs more to build a duplex than a single freestanding house, it’s usually cheaper than building two houses, and because both dwellings are on the same block, the land costs less than two separate lots.

Duplex projects have the potential for significant profits, but considering the hidden costs, determining whether a duplex is a good investment depends on several factors and diligent number crunching.

What is a duplex and what are the benefits?

A duplex is a single residential building with two dwellings under the one roof and a dividing wall between.

Also known as a dual occupancy, each side is a completely separate home, with its own entrance, amenities and yard.

Duplexes are sometimes on one title, meaning both halves must be sold together. If a duplex is subdivided into two separate titles, each home can be sold separately.

The biggest appeal for investors is the value added to the property when a duplex development is complete, according to director of Duplex Invest Paul Bieg.

“Those sorts of development wouldn’t exist unless there’s the potential to make money,” he said.

Two rental incomes from one asset also entices investors, and founder of Au Architecture, Swarup Dutta, said rental return was often above average.

“The yield is higher,” he said. “You get a higher square-metre rate, because you’re not wasting too much of the block.”

The return on investment is what appealed to investor Suresh Patel, one of Duplex Invest’s clients.

The project he recently completed in Port Macquarie cost $621,346 in total, including the purchase price of the land, construction costs, and fees for the development application, subdivision and strata titling.

The property is now valued at $880,000, creating almost $260,000 in equity in one year, and returning $760 in rent each week.

“Building a duplex creates equity and at the same time, it’s a higher rental return as well,” Mr Patel said.

What are the hidden costs of building a duplex?

Duplexes generally require large, wide or dual-frontage blocks, and appropriate zoning to subdivide the property into two separate lots.

Mr Dutta said suitable sites may command premium prices, as other buyers may have the same idea. “Sometimes the premium is so high that you might not make as much money,” he said.

Subdivision of a property isn’t straightforward and can costs thousands in consulting fees to town planners. “It’s not a DIY type of project,” Mr Dutta said.

Mr Bieg said the cost of this process surprised many buyers. “That portion is between $40,000 and $50,000,” he said.

Blocks with existing approval can minimise the hassle, but generally cost more than a comparable site.

Leatitia Sieders, another of Mr Bieg’s clients, took this approach when building her duplex.

“Because it was already approved it saved me a lot of time owning the land, and reduced my holding costs,” she said. “Having something that was ready to go saved me thousands of dollars.”

Design, approval and construction often takes more than a year, and holding costs can include loan repayments, council rates and land tax.

Daniel Mulherrin, from Taylor Willis Town Planners, said those taking the knock-down-rebuild route need to factor in demolition, which costs up to $20,000. “Typically it’s easier if there’s nothing on the site,” he said.

For those planning on selling a duplex within five years of completion, the transaction may need to include GST, which can affect overall profits. Capital gains tax is also payable on properties that aren’t a principal place of residence.

How can you make sure a duplex investment pays off?

To determine how much equity will be generated, investors should look at recent sales to estimate the value of each dwelling upon completion, and compare this with the purchase price and costs.

Buyer’s agent and Property Mavens founder Miriam Sandkuhler said suburb fundamentals are important for duplex builders.

“Location is paramount, so proximity to amenities, public transport, or parks – your typical growth drivers that apply to any property to maximise its chance to grow in value will apply to a duplex.”

The area will also affect the type of duplex constructed. “If you’ve got low land value you don’t want to overcapitalise on the quality of the build,” she said, adding that duplexes in areas with high land values should be finished to a high standard to reflect market expectations.

If there are a lot of duplexes in one area, oversupply can put downward pressure on rental return. “Try and develop them where they are the exception and not the norm,” she said.

Mr Mulherrin said site selection was critical, adding that town planners can advise buyers which developments are allowed before purchase.

“A dual occupancy definitely has potential for making money,” he said. “But it can also be a loss for someone buying into a property thinking it’s suitable for development and it’s not.”

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Strategies property investors can use to avoid paying too much tax
Alexandra Cain Jan 10, 2020

The way an investment property is owned can make a huge difference when it comes to the amount of tax that needs to be paid.

It’s essential for investors to carefully consider how the ownership of their properties is structured, and also the potential impact of land tax on their property’s return.

What is a discretionary trust?

When it comes to structuring an investment property to minimise tax, the best approach depends on the investor’s circumstances, according to accountant Nathan Watt from Watson & Watt.

Aear the trustees get to decide which beneficiaries receive a distribution, how much the distribution is and, depending on the terms of the trust deed, what class of income they will get,” Watt says.

For example, they may be able to give capital gains income to an individual with capital losses and the rental profit to a company that pays 30 per cent tax, rather than distribute the profit to an individual on the highest marginal tax rate of 45 per cent.

In contrast, owning a property as individuals, either solely, as joint tenants or as tenants in common, doesn’t provide any discretion on how the net rent or capital gain will be distributed.

But trusts also have limitations. If the property is negatively geared and held inside a trust with no other income going into that trust, losses can’t be used by the beneficiaries to offset other income. Rather, the loss is carried forward inside the trust, until such time as the trust has a profit, subject to the trust satisfying the carry forward loss tests.“If the property is held by individuals in their own names, they could offset the loss against their salary and wage income, thereby reducing income tax along the way,” says Watt.

As a result, trusts are often best used when building a portfolio of assets for long-term investing, with the trust the owner of all the investments. Some of the properties may be negatively geared and others may be positively geared, to make the most effective use of any losses to minimise tax.

“Business owners are good candidates for discretionary trusts, as trusts can own the shares in the company that runs the business,” Watt says. “The trust can receive the dividends from the company and also offset any losses on the property against this income.”

“A trust may also reduce their assets at risk if they were to be sued or the business fails,” he adds.

Owning the property for more than 12 months also results in a 50 per cent capital gains tax discount. If the property is held in a self-managed super fund, capital gains tax of 10 per cent instead of 15 per cent is payable if the property is owned for longer than 12 months.

Common tax mistakes

There are many common mistakes people make when it comes to claiming tax deductions for investment properties. “You can’t claim expenses for any period during which the property is not available for rent, such as when you stay in it,” says Watt.

Additionally, any repairs you make just after you buy it are not deductions. They are added to the cost of the property and reduce your capital gain when you sell it.

Many people are not aware of all the tax deductions they can claim for their property, according to Freedom Property Investors managing director Lianna Pan.

“There are up to 200 items that you can claim in your property as depreciation benefits.” Garbage bins and new grass are just some examples.

Pan says people are often not aware of land tax thresholds. Once these are exceeded, land tax can be substantial. “A lot of people don’t realise that until they get a huge land tax bill. But if you structure your purchases correctly, you can minimise your land tax.”

Watt says land tax thresholds are different in each state. “For instance, there is no land tax on the first $599,999 of taxable land value for individuals in Queensland. So a strategy might be to have different properties in different names, rather than having all properties in the higher income earner’s name for example. The main residence is exempt from land tax.”

It may also be appropriate to put the higher-value properties in individual names and lower-valued ones in the trust to reduce land tax. Also consider the net rent, capital gains tax and asset protection when making structuring decisions.

It is possible to contest the land value if you believe it has been wrongly assessed, but this isn’t an easy – or cheap – process.

There are many considerations to make when investing in property to reduce the tax payable and maximise the return. Before buying, work through different scenarios for the property to make the most of your asset over time.

discretionary trust is a popular option as it provides income distribution options and splits capital gains among the beneficiaries.

What is a duplex and what are the benefits?

What are the hidden costs of building a duplex?

How can you make sure a duplex investment pays off?

Common tax mistakes

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