New laws introduced on 30 November 2016 allow for the forced sale of units in an apartment
The strata management industry is in for a significant shake up with the “once-in-a-generation” changes to strata laws being introduced on November 30, 2016. The NSW Government has amended the laws regarding the management of apartment buildings allowing 75% of owners in apartment blocks will be able to sell...
ATO targeting property investors
A recent taxpayer alert [Trusts mischaracterising property development receipts as capital gains] concerning property development and the use of trusts is significant for property developers. Taxpayer Alert 2014/1, describes an arrangement whereby a trust undertakes property development activities as part of its...
Chinese regulators may turn off the money flow that is funding the Australian real estate bubble
A Chinese Government crackdown on the recently exposed activities of the Bank of China's money laundering efforts in Australia will have repercussions on the sustainability of high property values in Sydney and Melbourne. China’s state broadcaster CCTV has launched an attack on one of the country’s most...
Changing A SMSF Trustee to a Corporate Trustee
Benefits of a Corporate Trustee 1. Changing Members If an SMSF is set up with a corporate trustee structure you can add a member (e.g. a spouse or child) or remove a member (e.g. if a member dies or can no longer act as trustee) with much less hassle than an individual trustee structure. If there is a ch...
Our Legal Fees & Services
At GMH Legal we believe that client relationships matter more than time sheets which is why we offer a range of alternative fee arrangements to best suit your needs. Our focus is on client service and establishing mutually rewarding relationships with our clients. We think that billing by the hour does not ...
Homebuyer’s Guide to Conveyancing
Buying your first home can be a confusing process, particularly when it comes to conveyancing. Taking your first step on to the property ladder can be an exciting time. But for those who have never been involved in a property purchase, the conveyancing process can often seem hard to understand. What i...
The process of subdividing land can be time consuming, complex and expensive. It allows the applicant to divide land into two or more new parcels of land that can be disposed of separately.
The only new parcels that can be created by a plan of subdivision are lots, roads, reserves or common property.
How to subdivide property?
Land title in NSW is based on a plan of survey, or a plan compiled from a survey, which defines the boundaries of a parcel of land at the date upon which it was registered.
When new land parcels are created, after a subdivision for example, a plan must be prepared, lodged and registered with the Land and Property Information (LPI). In defining new parcel boundaries, the plan creates the legal identity of the land.
Every year, thousands of new parcels are created through subdivision activities in NSW and the LPI issues a Certificate of Title for each new land parcel to provide proof of ownership.
Who can submit an application?
You can choose to submit the application yourself but as this is a complex process, we strongly recommend that you hire a professional licensed surveyor or a Solicitor to do it on your behalf.
Their role is to:
- Determine the planning and development requirements
- Draft plans
- Lodge all applications and necessary paperwork
- Monitor the progress of the application
The profit from selling subdivided land may be a capital gain or ordinary income, depending on the circumstances.
If you subdivide a block of land – such as the land on which you live- and sell the newly created block, any profit is generally treated as a capital gain, subject to capital gains tax.
However, the tax treatment of a subdivision is different if both the following apply:
- Your intention or purpose in entering into the transaction was to make a profit or gain
- You entered into the transaction, and the profit was made, in the course of carrying on a business or in carrying out a business operation or commercial transaction.
In this case, any profit is treated as ordinary income (not capital gain), and you will probably have GST obligations and entitlements.
You do not need to be in business for this tax treatment to apply- it is enough that there is a profit motive and the transaction has the character of a business operation or commercial transaction. It could apply even for a one-off transaction such as:
- A subdivision by a non-business taxpayer
- A transaction by a business taxpayer that is outside the ordinary course of their business.
Fees you may need to may need to pay
In addition to the lodgement fees for the Land and Property Information office and the fees charge by a professional surveyor or conveyancer, there are other fees you may be charged when dividing land.
Sydney Water may charge fees to connect to new allotments to water and sewerage mains. The amount payable will depend on:
- The current location of the mains
- The number of allotments and their distance from the mains
- Whether any internal drains will need to be relocated or altered to accommodate the new allotments.
Please note that you might also have to pay for the connection or alteration of electricity supplies to the new allotments.
If you wish to lodge an application for the subdivision of a parcel, do not hesitate to contact GMH Legal. Our experienced team of property Solicitors will guide you through every step of the conveyancing process.
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