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The subdivision process can be an arduous one, which is why there are a few recommended tips landowners should follow. The last and final step is to obtain the new titles for the land. As soon as you receive your approval from the council, you can begin engineering design and installing new services and successes.
As the populations in our capital cities grow, residential development infill will be needed to accommodate future residents. Urban sprawl is not economically or environmentally sustainable as it places a large strain on public infrastructure, such as road and rail, as well as hospitals and schools. The environment also suffers as more land needs to be cleared for housing on the urban fringe and people make longer commutes in their cars. One reason many landlords like to subdivide a property is to ensure they have tenant renting at least part of the property. This is important for landlords who are making payments on a particular property and need to have enough money to ensure that the costs are covered.
How to Subdivide Land (Legally)
However, some prefer not to move from the location where they have lived for most of their lives, where they know their neighbours and feel most comfortable. Bob acquired a dwelling in August 1996 for $400,000, which was his main residence. Mary and John acquired a dwelling in April 1996, which was their main residence. Jim acquired a dwelling in May 2012 and resided in the dwelling as his main residence.
Even if your local surveyor or officials say that your property is ineligible for subdivision, you can still consult with an attorney. Seek out an attorney specializing in zoning laws to see if you are a good candidate for an appeal. Ineligibility or not, working with an attorney is always a good idea. Before you get started with the subdivision process, you’ll want to do a good amount of research on the back end. First, you’ll want to check for any restrictions in your area, such as neighborhood covenants, local ordinances, or deed restrictions that will block your plans. Required improvements to the property can skyrocket the total bill.
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If the property was purchased after September 1985, then the lot created may be subject to a portion of capital gains tax and any new dwellings developed and sold. While many municipalities do allow for homes to be made into multifamily units, many do not, and you may need to get building permits, zoning restriction waivers, and other permits. It is an examination of public records to find out if there are any previous owners who might claim an interest in the property or if there are unpaid debts such as taxes or loans. Other factors that complicate subdivision of property include whether the lot fronts an existing public road and whether you intend to build new roads, utilities and other infrastructure. Depending on the site design and layout, a subdivision project can easily escalate into a full-scale community development project. Subdividing property means dividing it into several parts.
If you are renting a property to just one family and the family leaves, you may not be able to find new tenant for weeks, if not months. If the unit is subdivided, you have a better chance at keeping at least one of your tenants who are making rent payments. Hire a developer or civil engineer to design the property. The plan will specify how the land is to be divided, including the number and size of subdivisions. The design should also illustrate how roads will reach the properties. If you are buying a finished lot for sale, your agreement with the builder will cover these services.
Everything You Need To Know About Subdividing a Property
For example in the City of Cockburn, R30 on an 800-square-metre lot allows for two dwellings. The first step is to determine the zoning and classification of the block. Residential lots are zoned with an R-Code, for example R30. This R-Code determines the minimum size of a block for any single residence.
In this case, each block gets its own title and the subdivision itself has no CGT consequences, provided you remain the owner of the property. What it does do, however, is create 2 new CGT assets, and the cost base of the land is apportioned to each block in a “reasonable way”, usually by block size or professional valuation. The house in which you choose to live in this scenario can still qualify for the main residence CGT exemption, whereas the other cannot. If not, hire a private surveyor or engineer to survey the property and create a plat.
Step 4. Hire a Surveyor
If you are one of the lucky people who purchased your main residence prior to 20 September 1985 then there are no CGT consequences when you subdivide. This applies for both main residence block and the investment block. Your replacement home retains the main residence exemption provided you rebuild and move in within four years of your main residence being demolished.
Generally, it would take 9 months to 1 year for a two lot subdivision from start to obtaining title. Now it’s time to submit your application and wait for a response. In most cases, the application must be submitted with a plat map, certificate of title and an application fee .
CGT can already be a complex area for the uninitiated, and this is certainly no different when it comes to subdividing the family property. Homeowners may see the potential in the land they have and look to subdivide; to increase wealth, enhance their property portfolio or even downsize for retirement. With the growth in popularity in this particular area, it’s worth a quick look at some common scenarios and what the CGT implications are. However the net capital gain on the sale of the vacant land would not attract the operation of the main residence exemption. As a general rule, adjacent land would be subject to the exemption if it was primarily used for private and domestic purposes in association with the dwelling. However the exemption only applies if the land and dwelling are sold together.
The surveying company you are working with will also begin to place new boundary pegs at this time. You will then need to hire a surveying or engineering firm to survey and plat your property. These entities should also provide more guidance on whether your property should be eligible for subdivision. Even if you run into a roadblock here, you are still able to proceed at this point.
Land owners typically subdivide their property into multiple residential units. The subdividing land is unique to each property as the laws and regulations are dependent on the state, city, town, or districts with which it falls. Ultimately, it is up to the local officials to approve or deny each request. The time it takes to subdivide a property will depend on the size of the lot, how much engineering is needed and the location.
When it comes to subdividing the family home, everyone’s situation will be different, so it’s important to weigh up the pros and cons and determine what’s right for you. Obviously if all you are producing is a lot of land for sale, then you could make do with a surveyor. If the site requires substantial development work to create the lot, then a development or project manager should be engaged.
Any analysis has to clearly consider capital gain tax implications and its impact upon the feasibility of the project. You can find out your R-Code using Intramaps, which is accessible from your local government authority’s website. You should then check with the council what that R-Code allows.
You continue living in your main residence and sell the other block of land. You do not pay CGT on the block on which your main residence is situated. One thing that is hard to put an objective value on is whether or not subdividing the home and making it into a multifamily unit will change the character of the neighborhood. Other neighborhoods already have multifamily units in them and one more will not make much of the difference. You will want to look at the neighborhood around the home before deciding whether to make it into a multifamily unit.
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