flood-affected properties, and filling these sites in order
to get above flood levels often isn’t possible as the result
can be the displacement of water into other people’s
properties. In instances where filling is required and
allowed, the cost can quickly get away from you and
there is usually a maximum level you can fill to,” he says.
As for road access, Eslick says existing infrastructure
might make this process difficult and expensive. Take
notice of any nearby traffic islands, intersections, bus
stops and street trees. The council may also request
that you pay to complete the kerb and guttering for
the new property. Fifty metres can cost up to $30,000.
Costs for subdividing will vary but in most cases
it’s a significant outlay. If getting your DA approved
is going to cost you around $100,000, it’s worth con-
sidering whether you need to build on the land before
sale. Perhaps just subdividing and selling off the vacant
land will be enough to turn a profit. In any case, make
sure you discuss projected costs with your surveyor or
planner and accountant. Msuch as an architect, acoustic engineer, traffic enginee
arborist and certifier may be required.”
MAKE THE CONNECTIONS
Most local councils will require your new lot to be con-
nected to water, drainage and sewerage, even if you’re
selling it. It sounds easy but it’s often a complicated and
expensive process.
According to Gateway Survey & Planning in Queens-
land, in a minor subdivision it can cost between $50,000
and $100,000 to connect a new block to water and sew-
erage. It’s a big expense to consider, especially if you’re
looking to subdivide a big block into several smaller lots.
In any case, you’re definitely up for a significant outlay.
Eslick says the cost of connecting to water and sewer-
age is hard to pin down in the planning phase because
there may be unseen complications. Sometimes access
to both connections might involve digging on a neigh-
bouring property, and in some council jurisdictions if
you don’t get permission from the neighbour you won’t
be able to subdivide at all.
“Sometimes connections to water and sewerage are
straightforward. Other times you may need to bring
t hem from some d ista nce away a nd u nderg rou nd, wh ich
if you haven’t allowed for it can blow your feasibility
right out of the water immediately,” says Eslick.
“A new water and sewer connection can range any-
where from about $7000 to $50,000, and on the odd
property even higher than this, depending on where
the services are located. You can’t therefore just apply
a nominal figure in your feasibility each time you
investigate a purchase.”
WAIT, THERE’S MORE ...
Complying with council regulations can take up a lot
more time and money than you expect. You have to
consider the slope, road access, the position of your
existing property and whether partial or full demolition
is necessary for development (or, depending on the age
of the dwelling, even allowed under heritage laws) and
the difficulty of removing any existing vegetation on
the new site (and depending on the species, whether it
can be removed at all).
The slope of the land is a big one in terms of how
much it might cost. If the council believes there are
issues with overland flow in particular rain events, it
may require a hydrological engineer to fix things, which
can cost you up to $5000 and take a couple of months
to sort out, if it’s even possible.
“In many cases you need to capture all the rainwater
that falls on the site, not just roof water, and then direct
that to a lawful point of discharge,” says Eslick.
“Generally councils do not want to be creating new
PROPERTY DEVELOPMENT
I
f you subdivide, developing in
itself doesn’t attract a tax because
technically you haven’t sold anything.
You only need to worry about tax
after you start selling off or renting
out the new lots.
Perhaps the sweetest tax perk
when it comes to subdividing is the
main residence exemption, which
disqualifies the property you’re living
in from attracting capital gains tax
at the point of sale. Mark Chapman,
from H&R Block, says that poten-
tially if you lived in each of your new
developments you could sell all the
new blocks, one by one, free of capital
gains tax. “Your current house is cov-
ered by the main residence exemption
so that’s CGT free when you sell, and
if you build a house on the other block
and move into it, then that becomes
your main residence,” he says.
“There’s no time limit to qualify the
main residence; it’s all about physically
making it your main residence. It has
to be your address on the electoral
register, it’s on your driver’s licence,
you get your post sent there – you’veactually lived there. You can’t sell each
property at the same time – you still
have to move from one to the other –
but ultimately you can sell both your
existing property and your new devel-
opment CGT free.”
If you rent out your new develop-
ment or move into it and rent out your
existing property, this will affect your
income tax. You also mustn’t forget
to get your property evaluated at the
time of subdivision. Chapman says
this is important for establishing the
correct capital gain on the properties
you eventually sell.
“If you are subdividing your prop-
erty, it’s worthwhile getting an eval-
uation done on the two blocks at the
time that you do it, because further
down the line when you actually come
to sell you will need to apportion costs
between the two blocks,” he says.
“You might think it’s a straightfor-
ward 50-50 but one block might be
worth more than the other, so it’s
worth getting someone in to do an
evaluation to ascertain what the rela-
tive split is between the two blocks.”Remember the tax office
er,ENT