House Flipping & Property Development Accountant
Specialist tax and accounting for Melbourne property flippers, renovators, and developers — keep more of your profits
The ATO is your silent partner in every Melbourne property flip
Melbourne's property market has long attracted investors, renovators, and developers looking to buy undervalued homes, add value, and sell for a profit. But the tax treatment of property flipping is far more complex — and far more costly — than many people realise. Without the right structure and planning in place before you buy, the ATO can claim a significant share of your profit.
At Elite Accounting Solutions, we specialise in property flipping, renovation, and small-to-medium property development across Melbourne. We help clients understand the exact tax treatment of their project, choose the right structure, manage GST and the margin scheme, and minimise their total tax bill — legally and compliantly.
The ATO's "Profit-Making Scheme" Trap
If the ATO determines your property was purchased with the intention to flip for profit, the gain is treated as ordinary income taxed at your marginal rate (up to 47%) — not as a capital gain eligible for the 50% CGT discount. This applies even if you held the property for more than 12 months. Intention at the time of purchase is critical. We help you document and structure your project to achieve the best defensible tax position.
Recommended Reading
The Property Flipper's Complete Tax Guide
CGT vs income, GST, the margin scheme, entity structures, and the 12-month timing rule — everything Melbourne flippers need to know.
Key Tax Issues for Melbourne Property Flippers
Capital Gains Tax (CGT) vs Ordinary Income
Whether your flip profit is a capital gain (CGT) or ordinary income depends on the ATO's assessment of your intention at purchase. A capital gain is taxed at your marginal rate, but with a 50% discount if held over 12 months. Ordinary income from a profit-making scheme attracts no discount — it's taxed dollar for dollar. The difference on a $150,000 profit can be over $30,000.
GST on New Residential Premises
If you substantially renovate a property and sell it, or build a new dwelling, GST at 10% applies to the sale price. On a $1,000,000 sale, that's up to $90,909 in GST. The margin scheme can significantly reduce this — but it must be elected at contract stage. Missing this election is a very expensive mistake.
The GST Margin Scheme
Instead of paying GST on the full sale price, the margin scheme allows you to pay GST only on the margin (sale price minus purchase price). This can reduce your GST liability by 60–80% in typical scenarios. Conditions apply: the vendor must agree, and the election must be made in the contract.
The 12-Month Timing Rule
Holding a property for more than 12 months before selling can qualify the gain for the 50% CGT discount. But timing alone doesn't guarantee the discount — if the ATO determines you always intended to sell for profit, it's ordinary income regardless. Planning both the structure AND the holding period is essential.
Subdivisions & Development
Subdividing land and developing multiple lots adds complexity: each lot may have a different cost base, GST may apply, and if you develop regularly, you may be considered a property developer by the ATO — triggering trading stock rules rather than capital gains treatment.
Cost Base & Deductible Expenses
Every dollar spent on renovation, legal fees, stamp duty, interest during the development period, and council costs adds to your cost base — reducing your taxable gain. Detailed record-keeping from day one is critical to substantiating your full deductions.
Choosing the Right Entity Structure
The entity you use to flip or develop property dramatically affects your tax liability, asset protection, and financing options:
Individual
Advantages
- 50% CGT discount if held >12 months
- Simplest structure, low admin cost
- Losses offset against other income
Disadvantages
- Top rate 47% — maximum exposure
- Personal liability on all debts
- No asset protection if things go wrong
Company
Advantages
- Flat 25–30% corporate tax rate
- Limited liability protection
- Good for frequent/serial flippers
Disadvantages
- No 50% CGT discount available
- Extracting profits attracts further tax (dividends)
- Higher annual compliance costs
Discretionary Trust
Advantages
- Income splitting across family members
- 50% CGT discount flows through to individual beneficiaries
- Asset protection from personal creditors
Disadvantages
- Cannot distribute losses to beneficiaries
- Trustee resolution must be made by 30 June
- Higher setup and annual compliance cost
Unit Trust
Advantages
- Good for joint ventures and partners
- Clear profit allocation per unit holding
- CGT discount flows through
Disadvantages
- Less flexible than discretionary trust
- Complex if entry/exit of unitholders
- Not ideal for a single owner
The right structure depends on your circumstances — how many flips you plan per year, your income from other sources, your asset protection needs, and whether you have a partner or family members involved. We always review this before your first purchase.
Melbourne Case Study
Ringwood Renovation
Purchase Price
$780,000
Renovation
$95,000
Sale Price
$1,040,000
Gross profit: $165,000. Held for 14 months. Here's what the tax outcome looks like depending on the structure used:
Individual (no planning)
$96,500
Tax payable — no structure or planning. Full marginal rate applies.
Company + 12-month strategy
$42,500
Tax payable — correct structure + timing + income splitting used.
*Illustrative example. Actual results depend on individual circumstances.
How We Help Property Flippers & Developers
- Pre-purchase structure advice — choosing the right entity before you commit
- GST registration and margin scheme election
- Cost base tracking and renovation record-keeping
- Income splitting strategies through discretionary trust distributions
- CGT vs ordinary income assessment and documentation
- BAS preparation and lodgement during the development period
- Tax returns for individuals, companies, and trusts
- ATO voluntary disclosure support if a prior flip needs rectification
- Joint venture structuring for development partners
- Subdivision and development tax planning
Related Specialisations
Property flippers and developers often benefit from our expertise across these related areas:
Property Investment
Long-term property investors face different tax treatment to flippers — negative gearing, depreciation, and CGT discount strategies.
SMSF
Some property investors use their SMSF to purchase investment property via a Limited Recourse Borrowing Arrangement.
Tradesman & Construction
Builder-developers and tradies who flip properties need specialist advice on both the construction and property tax dimensions.
Planning your first — or next — Melbourne property flip?
Talk to us before you sign the contract. Structure advice at the start of a project can save tens of thousands in tax. Book a free consultation with our property tax specialists today.
Related Articles & Guides
The Property Flipper's Guide to Tax in Melbourne: How to Maximise Profits and Avoid ATO Traps
Flipping houses in Melbourne? The ATO's silent partnership could wipe out your profits. CGT, GST, the margin scheme, and the right structure — the complete Melbourne guide.
Capital Gains Tax & Negative Gearing: The Complete Property Investor's Guide
50% CGT discount, cost base, negative gearing deductions, and timing strategies every Australian property investor needs to know.
Buying Property with SMSF: The Ultimate Guide to LRBAs and Bare Trusts
Using your SMSF to purchase investment property — the complete structure, compliance, and tax guide for self-managed super fund trustees.
Why Choose Elite Accounting Solutions
Industry Expertise
Over 40 years of niche industry experience means we understand the unique tax, compliance, and business pressures your industry faces.
Personalised Service
We get to know your business personally. No call centres, no juniors — you deal directly with experienced accountants who care about your outcomes.
Proactive Guidance
We don't just do compliance — we proactively identify tax-saving opportunities and strategies specific to your industry throughout the year.
Clear Communication
We explain everything in plain English. No jargon, no surprises — just clear advice so you can make confident, informed financial decisions.
Ready to work with an accountant who truly gets your industry?
Book a free one-hour introductory consultation and see the difference specialist advice makes.