The Guide To Subdivide

The Guide To Subdivide



The Guide to​ Subdivide
People find many creative ways to​ leverage a​ profit on real estate .​
One possible way to​ turn a​ profit on a​ purchased property is​ to​ subdivide .​
Subdividing your property can allow you to​ keep your home, by reducing your lot size and selling it​ off .​
The process to​ obtain a​ permit to​ subdivide may not be an​ easy or​ quick one, but if​ you're armed with the right information and follow your application methodically, it's certainly a​ possible and potentially profitable option .​
First off, it's important to​ note that each municipality will have their own unique application process for subdivision .​
This article details the most common steps in​ the subdivision process, although the process may differ from state to​ state, or​ town to​ town .​
If you're looking into purchasing a​ property that you'll subdivide down the line, do some investigating before hand .​
You'll need to​ look at​ a​ survey of​ the land in​ question and look into the municipality's subdivision requirements .​
The property your looking at​ subdividing will have to​ satisfy certain minimum lot requirements according to​ your municipality's application .​
Take note, that different areas of​ the same town may have different minimum lot requirements .​
Doing such an​ investigation can not guarantee that you'll be successful with a​ subdivision application on a​ given property, but it​ can give you an​ idea as​ to​ whether or​ not subdivision may be possible .​
If you're looking into subdividing a​ property you already own, you'll want to​ start with cross comparing your local subdivision requirements with a​ survey of​ your property .​
If by dividing your lot into two, both sections satisfy the minimum lot requirements, you're on the right track .​
If this is​ not the case, check into minimum lot requirements for differently zoned areas in​ your town .​
If there's a​ zone in​ which you can satisfy the minimum lot requirements, you might consider applying for re-zoning as​ a​ first step towards subdividing .​
If the zoning code permits your lot, the next step is​ to​ check for any subdivision ordinances that may make it​ impossible for you to​ do so .​
These ordinances, for example, may require a​ particular amount of​ frontage onto city streets .​
In some cases, new streets and utilities will have to​ be installed prior to​ the sale of​ a​ lot within the new subdivision .​
If you qualify under zoning and subdivision ordinances you can then move onto the next steps .​
If you've jumped through the above hoops and still seem to​ be standing, the next step, typically, will be to​ hire a​ land surveyor who'll draw up a​ plan of​ the prospective lot .​
If you talk with your local building and zoning department you'll be able to​ get a​ good reference and sort out how much the process will cost.
This plan will then go to​ the city, who may require numerous amendments to​ your original plan .​
Likewise, they may not approve it .​
It's often recommended that you talk with a​ local attorney who handles zoning and land use matters, to​ help you through this process .​
Another aspect to​ consider before subdividing is​ how you plan on making your profit .​
When you subdivide, your property will be considered two parcels .​
If you sell the land you're currently living on, you're selling a​ primary residence and so are eligible to​ keep up to​ $250,000 in​ profits from the sale, tax free .​
On the other hand, if​ you're selling the lot that you do not live in, this is​ treated as​ an​ investment property, and you'll be taxed appropriately on it-- 15 percent capital gains, plus whatever your state charges for capital gains tax.
One way to​ avoid the capital gains tax is​ through the 1031 tax free exchange, or​ like-kind exchange .​
To defer taxes on the sale of​ this property, you must purchase a​ different investment property for at​ least the same price as​ the property you are selling .​
You'll need to​ meet specific deadlines and have a​ third party intermediary hold the revenue from your property in​ escrow while you find a​ replacement property.
In the case of​ subdivision applications it's truly best to​ follow every step with precision and accuracy if​ you want to​ be successful .​
This may cost you up front, but you'll be rewarded in​ the long run.




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