GST on selling a new Build

I have a question regarding GST on selling a newly built house. I intend to build a house with a view to sell and do this through my company. My company does not have a GST number. What are the GST implications ? Does selling a new house attract GST and is it just the house and not the land portion ... etc?
 
Hi Andy
Unless it is a very cheap house you will need a GST number:mad:

For a resi sale I think the margin scheme is the way to go.......just dont ask anyone to explain it to you including the ATO :rolleyes:

Bundy
 
Andy

My first advice is not to use a company to do the development. A corporate structure is undoubtably the worst possible structure you could use for any appreciating assets. I cannot stress this enough.

If you construct new residential premises then you must register for GST as you will be an enterprise
If however you build with the intention of keeping the house for rental then you will not be entitled to claim the input tax credits for the construction costs and if you rent it for more than 5 years the subsequent sale will not be subject to GST as it will no longer be regarded as new.

Margin scheme would operate if you were to build.

EG Property purchased $150,000

Spend $220,000 building (GST Incl)

Sold for $450,000 (GST inclusive)

For GST margin calcs $450,000 - 150,000 = $300,000 (not $450K - $350K)

Therefore GST payable will be $300K / 11 = $27,272 and not on the total proceeds

Hope this helps
 
Nick,
my understanding of the margin scheme is that the GST paid to the builder needs to be deducted from the amount due on the $300k if the place is sold new.

GST only has to be paid once doesn't it?
 
Originally posted by NickM
Andy

My first advice is not to use a company to do the development. A corporate structure is undoubtably the worst possible structure you could use for any appreciating assets. I cannot stress this enough.

And the best structure would be a ...........
Are you thinking trust?

Regards,
Kim
 
What about MichealC's relocation senerio. What you're selling isn't a new builing, but a relocated, renovated one.

I vaguely recall something on the amount of renovation on the place... can someone confirm??

Jas
 
Originally posted by NickM


If you construct new residential premises then you must register for GST as you will be an enterprise
If however you build with the intention of keeping the house for rental then you will not be entitled to claim the input tax credits for the construction costs....


Hi Nick,

I recently spoke to an accountant I know (while buying him lunch ;) ) and explained that I intended to keep my soon to be constructed investment property for more than 5 years as a rental. He said I should still register for GST and submit a nil BAS four times a year.

As you said in the above post I'm not entitled to claim the input tax credits for the construction costs - is it still necessary to submit a BAS?
 
Thanks Nick,

I’ve spoken to a few different people about this over the last few days (in more detail) and there seems to be a common understanding that GST would not be involved as long as the intention was to hold the properties as a long-term investment.

I’ve been told this would change if you start selling (trading) properties, as it would then be considered a business enterprise with the requirement to register for GST.

I confirmed this with my new accountant today who specialises in property and development.

Thanks for pointing me in the right direction.

Steve.
 
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