another year, another 7-figure (after-tax) profit in the property market (pic)

Originally Posted By keels141⏩

Mirin OP, especially in the current market with interest rates rising and developers going broke left, right and centre.

It takes guts to take on that amount of risk, there's a lot that can go wrong with property development. Building materials are going through the roof, contractors are hard to find because the jobs market is tight as a drum, and of course there is the interest rate risk which is getting very unpredictable...we are living through the sharpest spike in interest rates in the last 40 years or so.

Are these properties held as trading stock or do you get the CGT discount? And what type of tax structure do you have - are you running it through a discretionary trust? Understand if you don't want to give away too much on the misc (even though you are posting your profits to troll people haha).

Also, I agree with keeping money out of fiat currencies where possible. I have most of mine in real estate, gold and bitcoin.

All of the above

Bearing in mind these developments are 4+ years from buying the block through to putting them on the market

AND

We are drip-feeding the supply of units to the market rather than selling off the plan or dumping them at the same time (they are luxury-style townhomes and we don’t want to compete against ourselves, also you can use each prior sale as precedent to bump the price of the next one)

The first couple of developments were financed by us personally and we leased/occupied to get CGT discount/exemption

Subsequently we’re buying though a company model which does not allow CGT discount however profits can be held in the company at 30%

We can distribute profits to directors at convenient times (for example, both wife and I took more than a year off work when kid arrived, so salary income was much lower across both financial years)

Also it’s not good to hold **too much** capital in the business beyond what is required to finance construction in case something untoward happens

Lastly all expenses are now current expenses (ie current year tax deduction) as opposed to capital expenses which are deducted at the end so better from a cashflow point of view

Re: risk I don’t think what we are doing is very risky, I have a lot to say on that but maybe another post

Although I will say interest rate risk doesn’t affect me

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Thread: another year, another 7-figure (after-tax) profit in the property market (pic)