Subdivide and Conquer
Many mortgage holders have been skimping and saving hard all their life to purchase their own home.
Subdividing your land can be a smart wealth creation strategy. However, there are a few key considerations such as how to get started and the question that makes many of us cringe; what will the taxman say about the subdivision plans?
Complying with the District Plan
An important part of determining whether subdivision is allowed in your case is understanding the applicable District Plan. This will reveal:
- The zoning that applies to your land
- Whether subdividing is a prohibited activity under the plan
- What conditions will apply
- The discretion the council can exercise
- Specific boundaries on subdividing
Issues to Consider
If you’re considering subdividing, you should consider the time and cost involved. It’s almost certain that the standard process will be lengthened by delays caused by, for example:
- Any hearing that is necessary
- The preparation of legal documents
- The need to complete specific work so that you comply with conditions that are imposed
- The need to obtain council approval
Subdividing is also an expensive exercise. The costs associated include fees charged by surveyors, consultants, the local council, LINZ, engineers and your
You may need to pay income tax on the profits you make from selling the land; this depends on when exactly your subdivision began and how much work is involved.
A word of caution
If you are looking at subdividing land and subsequently selling the subdivided land, you should consult your tax advisor to understand the possible tax and GST implications.Tags: District Plan, home buying, income tax, Subdivision, wealth creation