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Property Development & Investment Accounting Services

Posted 17 Oct '19

Hours and hours of research browsing through property after property and you’ve done it; you’ve found one which is ripe for acquisition that will make you rich. Maybe it’s a block of farm land and you would like to sub-divide and sell them as vacant lots, maybe you’re contemplating a town house or unit development. But no matter how large or small, novice or experienced, you’re going to need a trusted advisor who can guide you through the various regulatory complexities and commercial issues to ensure a successful property venture.

Here at Empire Accountants, we’re not just your average bean counters who provide a set financials and tax returns, but rather we reflect on your specific needs and are with you throughout each stage of your development to assist with making that develop the success you know it will be! Amongst other things, the big ticket items we can assist with include:

Property Development Structure

Structuring for a property development venture isn’t as simple as setting up a company and off you go. Whilst it does provide the benefits of limited liability (the ability to walk away from a failing project) and a cap on income tax at 30%, there are other considerations which need to be addressed. You also need to ask whether your structure allows for: 

  • Adequate control of decisions and assets;
  • ‘True’ separation between family assets and development assets;
  • Capacity for funding through the ‘development’ stage;
  • Minimisation of Federal and state based taxes; and
  • Flexibility in transitioning the property to family members and appropriating profits post development.

At Empire Accountants, we take a holistic approach to structuring by analysing your personal circumstances to develop a tailored solution which best achieves your needs. We cannot stress enough, the importance of getting the right structure, as it may ultimately save you from bankruptcy should the development not go as planned or ensures you keep as much money from the development as possible if you are successful!

Compliance & Reporting

In most instances, running your own property development project can be similar to running your own business and depending on those circumstances, you may need to: 

  • Prepare special purpose financial statements to present to financial institutions or potential investors for funding;
  • Prepare income tax returns for your respective entities to ensure compliance and tax minimisation;
  • Register for GST and prepare business activity statements to claim GST credits on development costs or pay GST on property sales; and
  • Attend to record keeping and bookkeeping to track and project profits.

With the latest in our cloud based systems, we will be able to provide you a customised accounting and management system to be able to ensure you meet any and all of your compliance obligations, track development profits and ensure you have the right documents to present to interested parties.

Taxation & Advisory

Australia has one of the most complex tax systems in the world. The federal government wants a piece of everything and can tax you on development profits (Income Tax), capital gains (CGT), and impose goods and services tax (GST) on the sale. But in the property context, your headache gets a whole lot bigger as now you’ll have to navigate through other state base taxes which include stamp duty on property transfers and land tax for land rich individuals or entities. Ouch! But with Empire Accountants on your team, we can ensure you reap the rewards of the development through the use of the following strategies: 

  • Distribution of profits to a bucket company to minimise tax on profits;
  • Trust cloning for asset protection;
  • Gift and loan back strategies to secure equity;
  • The use of special property companies for development of main residence;
  • Application of the GST margin scheme to reduce GST payable;
  • Use of Joint Venture Agreements to distribute profits;
  • Management fees for profit sharing arrangements;
  • Setup of negatively geared trust to be able to claim interest deductions and claim the 50% CGT discount;
  • Cash flow forecasts to project your cash position and funding requirements; and
  • Use of SMSFs for property development and funding.

Discuss how Empire Accountants can assist you with your property development/investment needs today by calling 07 3124 0244 you can begin building your property development enterprise.

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