Property Development and Stamp Duty Aren’t Mutually Exclusive! Development Agreements Are the Answer

As a Property Developer, does the thought of paying stamp duty make you shudder?

Enter, Development Agreements.

This article explains how your business can save paying stamp duty by hundreds of thousands of dollars when developing properties.

Also, read on to discover our additional method of deferring all of your business’ income tax …


What Is a Development Agreement?

Development Agreements are a contract between a Property Developer and Landowner.

This contract allows the land on which the property is being developed, to stay in the name of the Landowner. Developers then manage the day-to-day operations of developing the property.

With no transfer of a land sale, the Developer enjoys enormous cash savings from that dreaded stamp duty bill.


What Are the Terms of a Development Agreement?

Development Agreements sound like a pretty sweet deal, right?

Let’s look at what entering into a Development Agreement usually involves:

  • As mentioned, the land’s ownership stays with the original proprietor.
  • The Developer commences work on the land, possibly in stages.
  • Any risks fall to the Developer.
  • The Developer manages the marketing and sales, acting as an agent on behalf of the Landowner.
  • Net proceeds of the sales are reported by the Developer, to the Landowner.

To put it simply, the Developer does the heavy lifting in the agreement, in terms of sales, marketing and building. The Landowner retains the title of the land where the development occurs.



How Development Agreements Allow Developers To Save on Stamp Duty

The major win for Developers is a transfer of land sale from the original proprietor doesn’t occur. By not selling the land to the Developer, tax or duty obligations are not triggered.

Envision how much money your business could save.



And … Your Business Could Defer Its Income Tax Too

The benefits for Property Developers do not stop there.

100% of expenses the Developer puts into the project are tax deductible in the same year that works are taking place on the first project.

The proceeds obtained from this project are used to offset additional projects, within the same year, too. Operating with this method allows Developers to continually defer their taxable income, year after year.

That is one heck of an ingenious money-saving solution for Developers!



How To Get a Development Agreement Structure Working for Your Business

We have ticked off the main points that are involved in Development Agreements. However, all the financial contacts can be a lot to tackle on your own.

With your Gild adviser by your side, your burning questions can be answered and the heavy lifting handled.

Our experts have a world of knowledge, experience and contacts in the property development sector.

Time to optimise your operating structure?