Q&A: Develop, rentvest or debt-recycle? Structures, tax & capacity

Stuart runs a strategy clinic on three big crossroads for investors: small-scale development, rent-vesting vs. holding the home, and using debt-recycling into shares when an investment-grade property is out of reach. He breaks down subdivision options (sell land now, build-and-sell, or build-and-hold), explains why GST applies to an “enterprise,” when the 50% CGT discount disappears, and which ownership structures (discretionary trust with bucket company vs. company) suit repeat projects. He also covers feasibility rules of thumb (contingency, funding, pre-sales risk), and whether you can pay yourself for project management.

Next, he tackles rent-investing trade-offs: freeing borrowing capacity, concentration risk, and how to preserve deductible debt with splits and offsets. For households that can’t afford an investment-grade IP today, he maps a debt-recycling pathway P&I on the home, a clean, interest-only investment split, disciplined DCA into broad ETFs, and guardrails (buffers, LVR caps, rebalancing, no margin loans).

Finally, a Sydney case study stress-tests a high-debt, high-income family: IO vs P&I sequencing, daycare-era cash-flow management, super vs. taxable investing, and planning an eventual PPOR upgrade without painting yourself into a DTI corner. Core takeaways: buy only unequivocally investment-grade assets, separate security to avoid cross-collateralisation, keep buffers, and choose the structure and debt settings that protect flexibility while compounding for 10+ years.

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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.