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GST Treatment of Real Property

 GST treatment of real property

Summary of GST status of real property

Type of property

Example

GST treatment

Sale

Real Property

Residential 

Existing residence input taxed (No GST on Sale)
New residence Newly built or substantially renovated Taxable (GST on Sale)
or built to replace

Commercial 

Residential

Hotel, motel, boarding house

Taxable (GST on Sale)

Commercial property Factory, office Taxable (GST on Sale)
Farm Land Sale to farmer GST-free if sold on the basis that it will
Continue to be used as farm land
Going Concern Sale of property as part of an enterprise (business) GST-free if conditions satisfied

Income

Rental Real Property

Commercial

residential

* short-term Hotel Taxable (GST on income)
* long-term boarding house / on site caravan input taxed concession (Div 87)
Commerical Property Factory, office Taxable (GST on income)

construction house units

Any transaction involving real property is important to understand how GST may apply. The GST applicable can be complex as it will depend on a number of factors

Type of Property Involved

Vacant Land SalesConstruction Unit Development

Commercial Property

Commercial Residential Property

Residential Premises – Non Commercial

– New or Used

– Substantial Renovations

– Demolition & Rebuild, Duplex, Small Developments &  battle- axe blocksHouse concrete slab foundation preparation

– Change of Use

Parties to the Contract

Is the property transaction considered an Enterprise, if so GST will be applicable.

Are the parties to the contract registered for GST or required to be registered for GST.

 Date of Contract

Sign Contract HereMethod of Calculating GST

– Margin Scheme calculates the GST on the profit margins.

– GST Adjustment periods and when applicable

GST Property Decision Tools – to help determine the GST Treatment of the Property Transaction

GST Property Tool       

                           GSTR 2009/4  ATO Ruling on how to calculate GST Adjustments on changes in use (creditable purpose)                   

We can help with –

Women Present Building Plans VisionReviewing any real property  purchases, developments, to ensure the GST treatment is fully understood and optimised for your situation.

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