Background:
- My father owns three blocks of land which makes up his farm in WA. One he is living on, the second has sheds and house (I live and rent in) and the third is vacant land.
- Dad is semi retired but still operates some sheep and crops on all blocks. I work elsewhere but also at the farm.
- Dad and I have discussed the idea of me building a home on the third block to live with my family. It is estimated to be the least expensive of the three blocks.
- It has taken a long time to get to this point mainly due to me being over cautious. Even though our family get along well, I fully understand how things can change when money is involved. Furthermore, I don't want this situation to disadvantage my father financially. However, we see many advantages for both of us in this move and are both eager to make it a reality.
Issues:
- The block is currently worth approximately $500k.
- The complete build (including tanks, septics, etc) is estimated to be about $500k maximum.
- I have almost $300k saved but cannot afford to buy the block and build.
- The matter needs careful consideration as I have three other siblings (who are in agreement with the general idea of me building there).
Ideas Dad and I have pondered:
Scenario 1. Dad adds me to the title of that block of land as tenants in common. 75% Dad and 25% me. This represents my inheritance share of the block with Dad's share reserved for my three siblings. Being on the title allows me to obtain a construction loan. Upon my Dad’s passing, the land itself (ie. without the house) is valued (a valuer stated this can be done). It is written in the will or by contract that I have the first offer to buy out Dad’s share (with the portion of inheritance from the other two blocks).
Scenario 2. Value the block now, then add on my cost of building a home and create the percentage that way. So an ideal scenario was if the land is actually worth $500k and construction was similar we could go 50/50 on the title as tenants in common. In the future, the land and house, as a whole, is valued with the intention that I buy out the remaining 50%.
Questions:
Does anyone see any major issues, advantages or disadvantages in either scenario?
Are both fair for all parties involved?
Can anyone offer another scenario that may suit us better?
As the land is used for primary production and we intend to continue that after amending the title, we should be exempt from the duty fee. Is this the only fee? Then there is CGT which I have no clue about.
We intend to have this drawn up legally with a property solicitor, I don't think there is any other way. As much as we would love to sit down and have a good discussion over the different possibilities with such a person, at $600/hr we want to get as much information and knowledge on the matter as we can beforehand.
ps. If anyone can recommend a property lawyer in WA with more reasonable rates, I would love to hear from you.
Cheers!