Commercial Property GST



From: David J

Hi All,
I was wondering if anyone could fill me in on whether GST is payable on top of the asking price of a commercial property.I recently saw a commercial property advertised for a certain price and the following week it was advertised at 10% more with Gst inc following the price.
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Reply: 1
From: Dale Gatherum-Goss


Yes, commercial property owners should be registered for GST if their business and investment income is greater than $50,000.

If they are registered for GST then yes, the sale of the property is subject to GST.

I hope that this helps

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Reply: 1.1
From: Sim' Hampel

Hangon... there are situations with commercial property where GST does not apply to the purchase price (for example when you puchase a fully tenanted property as a "going concern").

The property in question in the original post could have been sold as a leased investment initially, but is now being sold with vacant possession. My understanding is that the GST status is different in either case.

Please seek professional advice about this to find out the exact situation - I may be wrong !.

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Reply: 1.1.1
From: Simon .

Just discovered another situation during my dealing for a commercial property at the moment. My agent tells me that if there has been no cap growth in the past FY then GST is not paid.

Feel free to email me if I can help.

Anyway my agent wrote:

> You're absolutely right. The GST will be charged if the property does not
> have a lease in place. The important consideration for you is that if a
> valuation of the property as at 30 June 2001 reveals that there has been no
> capital gain to date you are exempt from GST (leased or not). In the case
> of this property obtaining such a valuation will not be a problem because
> for the money you are spending it is more than likely we will be looking at
> a capital loss for the owner.
> I realise you have to be cautious and want you to understand that I am not
> a GST expert, what I have told you is about the limit of my knowledge on
> the subject. It does however, ensure that you will pay no GST on this
> property due to lack of capital growth since 30 June 2000.
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From: Sim' Hampel

The comments made by the agent are correct, but are not a complete description of the situation.

In order to offset the immediate impact of GST applying to some types of commercial property sales from July 1st 2000, the Tax Office out of the goodness of their hearts offers the following:

1. You go get a valuation of the property in question as at July 1, 2000 (starting date that GST applies).

2. You then go get a valuation of the property as at the sale date.

3. You are only required to pay GST on the difference between these two values - the capital growth (assuming value 2 is greater than value 1).

This of course equates to zero GST being charged if there was no capital growth since July 1st, 2000.

You'd really better check all this out with a suitably qualified professional and please correct me if I'm wrong ! A real estate agent is NOT suitably qualified to advise you on this matter ;-)

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