There is a dispute on whether GST is payable. We bought at mortgagee's auction where auctioneer stated all bids would be GST inclusive. The display home is currently leased back to the builder for use as a display home. We've since been advised that GST is not payable as it is a going concern however once the lease is up and we move in as a residence will GST be applicable?
GST on Display Home
- Thread starter Annh
- Start date
responses to this will be interesting. I would have thought it would be new residential premises and the seller would be up for GST on the margin scheme (if they so elected). either way, when you move in it will no longer be a 'new residential premise'
try googling "going concerm" "new residential premises" "GST" "display home"
try googling "going concerm" "new residential premises" "GST" "display home"
Since GST is paid by the vendor would this be a concern to you? Either way you would still pay the same amount - unless there is something contrary in the contract?
Can you solicitor or accountant advise.
We recently bought a rural property with 5 acres of vineyard off a GST registered company ... to avoid paying GST on the purchase we have to keep the vineyard operating as a going concern for 2 years (which is no drama for us) ... the other issue was that the bank wanted to charge commercial rates for the mortgage but a letter from a top vigneron stating that 5 acres was not a commercial quantity solved that problem.
Note - GST is paid by the buyer, not the seller, as with all GST applicable goods
We recently bought a rural property with 5 acres of vineyard off a GST registered company ... to avoid paying GST on the purchase we have to keep the vineyard operating as a going concern for 2 years (which is no drama for us) ... the other issue was that the bank wanted to charge commercial rates for the mortgage but a letter from a top vigneron stating that 5 acres was not a commercial quantity solved that problem.
Note - GST is paid by the buyer, not the seller, as with all GST applicable goods
Gst
We bought in good faith at auction, being told that all bids were GST inclusive. This was identified when completing the contract - listing both final bid price minus GST. The vendor is now saying that they are wanting the full amount (inclusive of the GST component on the contract) and then we are liable to pay the GST on the final price (i.e. that the contract as signed is invalid as the estate agent didn't have the written authority to sign). It appears to be a major stuff up by both the vendor's solicitor and the real estate agent and they're now trying to put the burden on us to pay extra.
We bought in good faith at auction, being told that all bids were GST inclusive. This was identified when completing the contract - listing both final bid price minus GST. The vendor is now saying that they are wanting the full amount (inclusive of the GST component on the contract) and then we are liable to pay the GST on the final price (i.e. that the contract as signed is invalid as the estate agent didn't have the written authority to sign). It appears to be a major stuff up by both the vendor's solicitor and the real estate agent and they're now trying to put the burden on us to pay extra.
Lots of interesting points raised Ann.
The mortgagee is not the owner, they have a contractual right to sell in order to recoup their debt so the beneficial ownership remains with the mortgagor (owner).
As for GST (per Lizzie), if it is a residential property or any other retail purchase, then generally it is the vendor who is liable for the payment of gst as residential owners/consumers are unable to claim the cost. Commercial properties have the purchaser paying the gst & claiming it back etc if they are registered.
Ann, the auctioneer is validly able to sign a contract on behalf of the vendor - there is no need to require a separate consent - what if the vendor doesn't show at the auction?
If the property is being purchased as a going-concern, get yourself an abn & register for gst, make sure the sale meets the conditions for a going concern (accountant should be able to confirm & do any registration), then claim the gst within the month of settlement. NO BIGGIE, just extra money out of your pocket for a month (possibly), then to get your own back ensure that the lease agreement has gst payable.
Gst
A lawyer you say? We've sought solicitor, barrister and accountant's advice and no-one can be definitive in an answer. They say 'just pay' - well when you're talking $50K and it's not them paying out of their pocket!!! And we're the victims here of a huge blunder by the vendor's solicitor and the real estate agent.
A lawyer you say? We've sought solicitor, barrister and accountant's advice and no-one can be definitive in an answer. They say 'just pay' - well when you're talking $50K and it's not them paying out of their pocket!!! And we're the victims here of a huge blunder by the vendor's solicitor and the real estate agent.
There should be a definitive answer. It is a straight forward yes or no type answer. Did you pay for the legal advice?
Paid and still paying! this has gone on for 4 months now hence my frustration and deciding to seek on-line advice/comment
I don't know the finer details, but what does the contract say about GST. I don't see the margin scheme applying.
You have stated you have a contract showing the final bid price less GST and GST payable if applicable. This is the answer to your question about how much you need to pay. If vendor says it includes GST then you pay your final bid price and work out with accountant how to deal with this. No advice required.
The key question is - DO YOU HAVE A VALID CONTRACT. THey have stated the agent did not have authority to sign this contract. I would not look into other issues at all until you resolve this. Any changes to what is signed requires an amendment to the contract to be agreed and signed by both parties.
You either have a valid contract or you dont. If it is invalid walk away (and take civila action against agent if you feel it is warranted) if not enforce you rights and take legal action to arrange settlement inline with terms of contract.
The key question is - DO YOU HAVE A VALID CONTRACT. THey have stated the agent did not have authority to sign this contract. I would not look into other issues at all until you resolve this. Any changes to what is signed requires an amendment to the contract to be agreed and signed by both parties.
You either have a valid contract or you dont. If it is invalid walk away (and take civila action against agent if you feel it is warranted) if not enforce you rights and take legal action to arrange settlement inline with terms of contract.
Thanks Scott - no, the vendor wasn't at the auction and yet their solicitors (who also weren't at the auction) claim that the estate agent needed 'written authority' to sign the contract and they just want to 'tear it up'. In my view it is a legally binding document but I don't have the resources ($$$) or the expertise to fight one of the biggest banks and law firms in the country.
My understanding of the law in Victoria, the Auctioneer can only sign the Contract if he/she has explicit written authority to do so. In other states, the Auctioneer has the right to sign the contract. There is numerous case law confirming this. I don’t believe that explicit written authority is in the standard "auction listing authority". I believe that if the Auctioneer held himself to have that authority, and really did not have it, then he may have committed an actionable offence. I agree with the above comments, if there is no contract, then you walk, or negotiate terms satisfactory to you, for a new contract. It sound like the lease may be a commercial one, hence the reference to going concern. The rent being paid, may include a GST component.
Also, GST is not actually paid by a buyer. The rules state, that a GST registered entity, must send 1/11th of their GST assessable income off to the Tax man on the intervals that are set for them. GST registered entities are allowed to increase their prices by 10% to cover their GST liability, and must issue a Tax Invoice which must clearly show the amount of GST claimed to form part of the charge/cost. This is so that the Buyer clearly knows, and if registered for GST, what they can claim as a GST refund.
I have seen contracts where the Seller includes a provision that if GST is levied at some later stage, that they can then claim that back from a buyer. I would delete that clause.
Also, GST is not actually paid by a buyer. The rules state, that a GST registered entity, must send 1/11th of their GST assessable income off to the Tax man on the intervals that are set for them. GST registered entities are allowed to increase their prices by 10% to cover their GST liability, and must issue a Tax Invoice which must clearly show the amount of GST claimed to form part of the charge/cost. This is so that the Buyer clearly knows, and if registered for GST, what they can claim as a GST refund.
I have seen contracts where the Seller includes a provision that if GST is levied at some later stage, that they can then claim that back from a buyer. I would delete that clause.
Did you seek advice on the contract from these same solicitors before you entered it?