If you're building a house there's one component that makes up a large part of the price, and that's the land.
And as much as houses are in demand it's the land and the location of the land that's important for buyers, councils and speculators.
Land prices have increased from a median section price of $94,000 in 2003 to more than $200,000.
With demand rising for new houses and good areas to build, I've had a few people looking for advice on subdivisions where their home is also part of the property.
Each client had specific circumstances, which meant different outcomes and advice.
The information here is general and subdivisions are tricky not only when looking at council processes but also when it comes to tax so make sure you get some advice on the processes and structure for your circumstances.
You will need to engage your surveyor, lawyer and accountant team in a meeting.
The myth I hear often is the first subdivision is tax free, especially if it has been owned for more than 10 years.
Where it's a simple subdivision and its only surveyed and pegged then more than likely this could be the case.
However if you're bringing in diggers and major earthworks are involved then it counts as work of a major nature and you'll need to consider the tax consequences.
If you have been doing subdivisions every few years and established a pattern of activity or if you purchased the land for resale then you'll also need to review your tax situation.
Structures are an important part of risk and tax planning when it comes to larger subdivisions.
Companies are useful but if possible avoid transferring your residence into the company -- a subdivision and subsequent transfer or sale could have a tax liability attached to it where it wasn't expected.
GST is claimable on land that you are looking to subdivide but this is limited to cost, not its market value.
So while you're sitting on the deck this summer pondering the profits of the division of the land make sure you do your planning properly. The impact of tax and GST can throw the costings and benefits of subdividing so make sure you get good advice.
Jeremy Tauri is an associate at Plus Chartered Accountants.