Structuring your property development – what’s best for you?

If you are considering getting into property development, you could structure the development as a sole trader, partnership, company or trust.

As with your main business, many developers will protect themselves by using a separate entity (a company or trust) for each development.

However, the ownership of the land on which the development is to occur often determines the development entity, so it is important to get this right so you don’t run the risk of paying additional stamp duty by having to transfer ownership.

Whatever entity and development arrangement you adopt, it is vital that you clearly identify and document the identity and role played by each party.

Beyond the structures, there are some additional legal structures common in the property development space that are worth considering – special purpose vehicles, joint ventures and self-managed superannuation funds.

Understanding your options and which would best suit your specific development, is paramount.

  • A special purpose vehicle (SPV) is a separate formal structure (either a company or a trust) that brings together separate parties, such as a developer and an investor, for the purpose of a property development.
  • A joint venture (JV) is simply an agreement between two or more parties that they will undertake a commercial activity. It can be incorporated (company) or unincorporated.
  • A self-managed superannuation fund (SMSF) is self-explanatory but what some people are not clear on is the ability to undertake development activities, albeit within very strict guidelines.

Which would best suit you?

Whilst your personal and business situation is likely to differ from others, you would likely fall into one of the above structures with any development you wish to undertake.

If you would like to discuss a development project with us and what make best suit you, please get in touch for an obligation free chat.

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Tony Dimitriadis
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