Accounting For Property Developers
Are you in the property development industry? When it comes to your property portfolio, reliable and sound accounting and tax advice can make all the difference.
This is where a professional property account like ours comes in. An accounting firm with accountants who know the Australian property development and investment industry inside out. From buying, selling, investing, property tax, CGT, GST, and much more.
Crest has property development accountants that understand the requirements and are here to help you reach your property development and investment goals.
Crest Accountants do just that and here to help with:
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Specialist Accountants for Property Developers
Whether you are a property developer or investor, you should have a professional accounting firm on your side, one who specialises in the industry with expertise and acumen in all aspects including buying, selling and investing. This includes all the ins and outs of the property taxes, including CGT and GST, as well as tax minimisation strategies.
At Crest we specialise in property developer accounting, and our team has over 45 years of working closely with property developers with strategies and forecasts to reach their goals.
Accounting services for Property Developers
Property is one of the subjects that comes up in everyone’s life at some point, whether you are buying your first home or purchasing an investment property or even starting your own business flipping or developing property. Wherever you are on the property ladder, we have a team of accounting for real estate developers specialists here at Crest who can assist you achieve your goals.
Anyone in the Australian property industry knows that not only is the field complex, but the laws and regulations from the ATO can change frequently. Our team of property tax accountants are well versed in property development and tax laws and can help you navigate your way through the complexities, while also legally minimising your tax liabilities and costs so that you can maximise your investment returns.
Our team of specialists can help you with the following services:
- Property Development Accounting
- Accountants for Property Investors
- Property Investment portfolio structuring
- Property development cash flow and forecasting
- Budgeting and planning for property developments
- Tax minimisation strategies
- Debt management and structuring
- Capital Gains On Property
At Crest, as specialised property development accountants, we can help you with your financial matters such as property exchange contracts, setting your budgets and paying your bills on time, accessing finance if needed, and then also handling your company tax return and tax obligations.
Property development accounting: What is Capital Gains Tax on Property?
Ever since Capital Gains Tax came about in 1985, Crest Accountants has had specialists in the subject and how capital gains and losses affect business owners. Capital gains is the increase in value of an asset, such as an investment or property. If an asset is bought and then sold for a higher price, the amount of the gain is taxed. In Australia, Capital Gains Tax applies to property sales. There is no way to avoid this, so property developers must be extremely diligent to comply with the regulations, understanding that it is part of the process.
As experts in property and CGT, our team can help with comprehensive guidance and advice, and we’ll help you plan ahead to factor this in as an expense. While also taking advantage of possible exemptions, concessions, or rollovers that could help reduce your tax liabilities and costs.
Do property developers pay GST?
In Australia you are generally required to pay GST (Goods and Service Tax) on goods and services sold. This is a 10% tax applicable on the sale of goods and services for a business that turns over $75,000 a year. Most property developers earn above this threshold, so they are required to pay GST.
If you are a property developer and you are unsure about how much – GST you owe, or required to be registered for GST, reach out to our team. We can make sure that you are not exceeding or underpaying your tax obligations.
How Crest can help to minimise tax liabilities for property developers
Whether you are a seasoned property developer or if you are just catching the bug for flipping homes or building a new dwelling, you must clearly understand the impact that taxes have on the success of your project. Along with the many challenges of building and the sale of new assets and property, there is also the complexity of accounting of real estate developers, as well as the tax and legal requirements.
Once you sell your property, you will receive a tax bill. This is inevitable and unavoidable. However, with the right planning, you can see this as a sign of success that you have made money, and you have a clear understanding of how much you owe to the ATO and how it affects your final figures.
Below are our tips for how to plan ahead and minimise your property development taxes.
Be organised from the start. One of the most important rules of business, especially property development is to know your numbers. Keep track of your real estate development costs and determine how much you want to make at the end of the projects. We recommend using a cloud-based accounting software, like Xero, so you can easily manage your finances from your mobile phone from anywhere in the world.
Register for GST if required. You will need to check if you must register for GST, depending on your income, since you will have to pay an amount of GST on the sale of your property or properties. Fortunately, you can offset expenses by claiming GST credits for costs that were incurred while you developed your property. Figuring out your GST obligations and how much you owe can be tricky and complicated, especially when dealing with GST credits, so you should work with an accountant who thoroughly understands the property industry.
Define the purpose of your development. Depending on your goals, your property development can be either a profit-making scheme or a capital gain. If you have purchased the property, with the intention of developing, flipping and then making a profit from the sale of it, then your purpose and development activities are a profit-making scheme. Therefore, the revenue of the sale will be taxed, just like the income of a business. However, if you are working on a smaller sale and have purchased a home to renovate as a personal project, you will only need to pay the CGT on the sale.
Hire a professional accounting team that specialises in tax minimisation. Our team can help you plan for the tax bill upon the sale of your property. To minimise capital gains tax, you can implement strategies to distribute some of the income from the sale into your superannuation or plan your cash flow through timing the sale during the financial year. Ask our team of property tax specialists for guidance in this area.
There are also possible deductions to consider over the course of the property development are the cost of the land that you purchased, the expenses of contractors, designers and architects and the purchase of materials. Keeping track of expenses from the very start will help increase your total deductions, which can minimise the tax on the sale of your property.
Accounting for real estate developers
Talk to the team at Crest today about how we can help manage your property financials, cash flows and expenses, and make sure your business is fully compliant with all tax and legal regulations. Contact our property accountant today to get started.
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How Accountants Specialising in Property can help
Property development can be a very rewarding experience, as you see your land and project turn into brand new homes. With the rewards and satisfaction, the industry is also incredibly complex. It requires meticulous forecasting, research into the property market, and countless hours working with architects, builders, and property lawyers.
The most important consultant that property developers must hire is a specialised, professional accountant. Not only is this to manage the budget and financials of the project, but to also help you to navigate the tax implications during and after construction. Diligent accounting, budgeting and tax forecasting are a vital part of the success of your property development and should be placed in the hands of experienced professionals. No matter how big or small your upcoming development and project, contact the team at Crest today.
Property Development Accounting FAQs
The distinction matters significantly because the ATO treats them differently. A property investor buys property to hold and generate rental income, with any eventual sale generally subject to Capital Gains Tax (CGT). A property developer, on the other hand, acquires land or property with the intention of developing and selling at a profit, which means the proceeds are typically treated as ordinary income rather than a capital gain. This is an important difference because property developers do not receive the 50% CGT discount that investors who hold an asset for more than 12 months are entitled to. Getting this classification wrong can result in a significantly larger tax bill than expected, which is why it is important to establish your intentions clearly from the start of any project.
This is one of the most consequential decisions a property developer will make, and the answer depends on your specific circumstances, including whether you are developing to sell or to hold, the size of the project, the number of people involved, your personal income level, and your asset protection requirements. Developing through a company provides liability protection and a flat 25% or 30% tax rate, but companies cannot access the 50% CGT discount. A discretionary trust offers income distribution flexibility but can be complex to administer. Individuals or joint ventures may suit smaller projects but offer limited asset protection. Each structure has trade-offs, and in some cases a combination of entities is the right answer. We work through the options with you before you commit to anything, as restructuring after the fact is costly and complex.
Property developers can claim a broad range of costs as deductions against the income earned from a development, provided they are directly related to the project. These typically include the cost of land acquisition (as part of the cost base), architect and design fees, town planning and council application fees, demolition costs, construction and building expenses, project management fees, interest on development finance, legal and conveyancing costs, marketing and sales commissions, and accounting fees. Timing is important because many of these costs are only deductible in the year the development is sold rather than when the expense is incurred. We help clients structure their project accounting to ensure every eligible deduction is captured and claimed correctly.
Land tax in Queensland is a state tax levied annually on the total taxable value of freehold land you own above a certain threshold, currently $600,000 for individuals. It applies to investment properties, vacant land, and commercial properties, but not to your primary place of residence. The rate increases as the total taxable value of your Queensland landholdings grows. For property developers holding land across multiple sites, the cumulative value of those landholdings can push you into a higher land tax bracket quite quickly. We help property clients understand their current and projected land tax exposure, structure their holdings appropriately, and stay on top of annual assessments to ensure they are not overpaying.
Cash flow management is one of the biggest operational challenges in property development because costs are front-loaded while income is received only at settlement. You are typically paying for land, holding costs, development finance interest, construction draws, consultant fees, and council costs for an extended period before a single sale completes. A detailed cash flow forecast that maps every outgoing against your anticipated settlement dates is essential, not just for managing the business but also for satisfying lender requirements. Developers also need to plan for GST timing, as you pay GST credits throughout the project but may not receive your GST refunds until quarterly or monthly BAS lodgements are processed. We build project-level cash flow models for development clients that account for construction drawdowns, sales programme timing, tax liabilities, and GST flows so there are no unpleasant surprises during the build phase.
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