GST on sale of property

[beech]

hi there,

approx 4 years ago i purchased an old home and built 2 units side by side.

they have been rented out since built.

the intention was never to sell but poor cashflow means i will have to sell one.

i did NOT register for GST at the start for the purpose of building these units but i AM registered for GST as i am a tradesman.

i have read a number of threads regarding the gst on sale of property and think i understand but every situation is slightly different so hoping for some clarification.

now it seems to me on reading other posts that because i didnt register for gst at the start and claim any back from the building of the units i havnt triggered anything i shouldnt have back then.

i also never intended to sell these units,hence they have been rented for over 4 years.

so i believe even though i have held them less than the usual 5 years for new buildings to be exempt of GST,because i always intended to keep them and didnt register for GST at the start that i will NOT have to pay GST on sale prior to the 5 years if i sold one now and will also get the 50% reduction re CGT?.

is this correct?

hopefully i understand this correctly.

also i hope the fact that i am registered for GST as a tradesman as previously mentioned does not somehow put a spanner in the works.


thanks,Darren

 

[Propertunity]

i did NOT register for GST at the start for the purpose of building these units but i AM registered for GST as i am a tradesman.

Darren, the issue is not whether you are registered for GST, but whether the entity that you used to do the development is registered. If you did this development in your own name, then you still would not have been required to claim GST input credits, as it was your intention to hold them.

.....so i believe even though i have held them less than the usual 5 years for new buildings to be exempt of GST,because i always intended to keep them and didnt register for GST at the start that i will NOT have to pay GST on sale prior to the 5 years if i sold one now

"Intention" does affect CGT but does not affect your GST liabilities as far as I am aware. I believe you will be required to remit GST to the ATO for the sale, BUT you will also be able to claim GST input credits for the build on the unit that you want to sell, since you did not hold for resi rent purposes for the required 5 years.

 

[Melbournian]

i would just get an ATO tax ruling if you are not sure.

But yes - whether it was registered in ur name or whether it was registered in a development entity would sort of determine your GST liablity.

But you have to realize - being in ur name is probably much better - as your original "intention" was to rent out. Also - if you profession was like a doctor or an engineer, that is your primary occupation. Sometimes circumstances out of the odinary force you to sell.

 

[Ausprop]

if you are registered for GST in your own right and you did the development in your own right then you will have a GST liability... albeit diminished due to them being rented for 4 years