The advantage of a Partnership in Property Development is to combine strengths and bring together resources. Each party is as important as the other to make this work. The provision of land is the merger of a (Property Owner) and other partners with the ability to provide finances (Financier) combined with a skills and experience of a local (Developer) who will work on the successful completion of the development with mutually agreeable outcomes.
The key to this arrangement is transparency, honesty, and integrity. Since all parties involved provide key inputs to the project, the end result should also be a mutually beneficial outcome for all parties since everyone is engaged to bring the project to fruition.
Not all Partnerships in property developments are the same but the outcomes often result in ‘cash out’ (proceeds from sale) or ‘hold a key’ (keeping a unit), sometimes even a combination of both.
The tax implications of each scenario will differ between the size of projects and the individuals involved so the advice here would be to speak to your own Financial Planner and Tax Accountant. End of the day, the aim is to create a win-win for all parties and it is not a bad thing to be thinking about ways to ‘minimise’ tax.
