Hi All,
I have came across a great thread on GST implication:
http://somersoft.com/forums/showthread.php?t=31407
However my situation could be different and I would like your opinions:
Case 1: I have purchased 2 properties (i.e. two development projects) and planning to retain the existing houses and building two townhouses at the back of the existing houses.
I'm intending to live in one of the new houses and rent out the rest. My intension is to continue expanding my property portfolio by withdrawing the equity to make new purchase instead of selling (reduced by agent fees and tax). However I can not rule out the possibility of selling the new houses down the track within 2 years of building completion.
So here is my question, if I do decided to sell them to release more equities for future projects(within two years of completion), will this be subject to GST?
Case 2: At the same time, I've got a strong positive cash flow property in a mining town which I have retain the existing house and built another house at the back of the block. My intention was to keep both houses as investments as they will provide the positive cash flow which can offset the negative cash flow from Case 1.
The build has completed and I'm going to put a tenant in place. However as the market is slowly going down I'm thinking of selling them to reduce my explosure. So here's the question again, if decided to sell the new house with tenant in place (within 1-2 years), will this be subject to GST?
Case 3: I'm also planning to buy a land and build. There will be a small margin and again strong positive cash flow. My question is, will this be subject to GST if I buy the land, build, rent it out for strong cash flow then sell it down the track (within 1-2 years) if market condition changes?
All cases are owned by a DFT and I was informed by my account that they are not subject to GST because:
1. I'm only doing 1 or 2 units at a time (It doesn't look like I'm developing many and sell) i.e. I'm more like treating them as property investment than enterprise
2. I'm having a full time job hence this is not my primary income source.
As a result, my accountant is very confident that as I'm not carrying out an entreprise thus I will not be liable for GST. The contradiction between the ATO GST guide and the advice i'm given by my accountant is driving me crazy.
As this area is quite grey, I would love to hear what you think.
Thank you in advance.
I have came across a great thread on GST implication:
http://somersoft.com/forums/showthread.php?t=31407
However my situation could be different and I would like your opinions:
Case 1: I have purchased 2 properties (i.e. two development projects) and planning to retain the existing houses and building two townhouses at the back of the existing houses.
I'm intending to live in one of the new houses and rent out the rest. My intension is to continue expanding my property portfolio by withdrawing the equity to make new purchase instead of selling (reduced by agent fees and tax). However I can not rule out the possibility of selling the new houses down the track within 2 years of building completion.
So here is my question, if I do decided to sell them to release more equities for future projects(within two years of completion), will this be subject to GST?
Case 2: At the same time, I've got a strong positive cash flow property in a mining town which I have retain the existing house and built another house at the back of the block. My intention was to keep both houses as investments as they will provide the positive cash flow which can offset the negative cash flow from Case 1.
The build has completed and I'm going to put a tenant in place. However as the market is slowly going down I'm thinking of selling them to reduce my explosure. So here's the question again, if decided to sell the new house with tenant in place (within 1-2 years), will this be subject to GST?
Case 3: I'm also planning to buy a land and build. There will be a small margin and again strong positive cash flow. My question is, will this be subject to GST if I buy the land, build, rent it out for strong cash flow then sell it down the track (within 1-2 years) if market condition changes?
All cases are owned by a DFT and I was informed by my account that they are not subject to GST because:
1. I'm only doing 1 or 2 units at a time (It doesn't look like I'm developing many and sell) i.e. I'm more like treating them as property investment than enterprise
2. I'm having a full time job hence this is not my primary income source.
As a result, my accountant is very confident that as I'm not carrying out an entreprise thus I will not be liable for GST. The contradiction between the ATO GST guide and the advice i'm given by my accountant is driving me crazy.
As this area is quite grey, I would love to hear what you think.
Thank you in advance.
