Do you have to pay GST when you sell an IP?
GST when selling
- Thread starter Tulamalula
- Start date
so if you removed a house from a block and built something new there, would you have to pay GST on that one - if you didn't claim any GST as expenses on the construction?
Generally no, but it depends on the circumstances. Was it your intention to build and sell for a profit, or was your intention to build a rental property?
Is this the first time you have undertaken this type of endeavour?
I'm not doing this now, maybe in the future with a second IP. The intention would be to build as a rental not for immediate sale.
If you sold it as a new residential dwelling then it is likely you would have to pay GST on the sale. It's complicated though and rarely that straightforward. Have you read "How not to be a property developer"? It will do your head in!
As you say, it depends. I can think of four scenarios:
1) build to sell at a profit - you would claim back any GST that you pay during construction and then remit GST collected on sale to the ATO.
2) build to rent & rent for 5 years min - you would not claim back any GST during construction and would not 'charge' GST on sale
3) build to rent but sell in less than 5 years - you would not claim back any GST during construction and would 'charge' GST on sale (don't do this!!!)
4) build as a PPoR and live in but sell in less than 5 years - you would not claim back GST during contruction. Whether you need to 'charge' GST on the sale I have no idea.
Not read that book but I think I need to at some stage.
It's just a free .pdf. http://www.bantacs.com.au/booklets/How_Not_To_Be_A_Developer_Booklet.pdf
It just highlights the fact that figuring out your structures, whether or not to claim GST on land and/or construction and calculating a GST liability at sale is not DIY. But then, considering that getting it wrong could cost you hundreds of thousands of dollars... I don't see that paying for proper advice is an issue.
Ah good, thanks for that, something else for me to read about property. At least it gets me off re.com
Anything interesting today? I have not looked.
Trying to get off re.com - but am sure I will go there. Okay, I lied, I've been there twice ... busted
Devvie site in Gosnells, the only one of 6 I listed 2 days ago that isn't under offer - yet over $420K R30/40
http://www.realestate.com.au/property-house-wa-gosnells-116157383
Devvie site in Gosnells, the only one of 6 I listed 2 days ago that isn't under offer - yet over $420K R30/40
http://www.realestate.com.au/property-house-wa-gosnells-116157383
ooh and this one - another devvie site in Cloverdale. Woo HOOOO - 789 zoned .... R20!!! 
http://www.realestate.com.au/property-house-wa-cloverdale-116177883
Cloverdale address available on request
"SHAKING ALL OVER?.SO WILL YOU BE!!
Coming Soon... Park side corner Duplex Development site!
The not so good news....
As victim of times, this 3 bedroom 1 bathroom 1969 built brick & tile home is very close to extinction! In need of extensive renovation, could it be brought back to life is one burning question?? Or should we just demolish and start again??
http://www.realestate.com.au/property-house-wa-cloverdale-116177883
Cloverdale address available on request
"SHAKING ALL OVER?.SO WILL YOU BE!!
Coming Soon... Park side corner Duplex Development site!
The not so good news....
As victim of times, this 3 bedroom 1 bathroom 1969 built brick & tile home is very close to extinction! In need of extensive renovation, could it be brought back to life is one burning question?? Or should we just demolish and start again??
City of Belmont has that flexible corner lot provision thingy.ooh and this one - another devvie site in Cloverdale. Woo HOOOO - 789 zoned .... R20!!!
It goes like this:
"(2) The City may permit the development, or support the subdivision of an existing flexible-coded or R20-coded corner lot to a maximum density of R30 provided:
(a) All existing improvements which in the opinion of the City is:
(i) of low quality or incapable of being upgraded to a standard commensurate with new development; or
(ii) is poorly sited and fails to maximise opportunities in relation to proposed lot boundaries;
are demolished."
http://online.planning.wa.gov.au/LP...Belmont - City of (Scheme 15)/Scheme Text.pdf
So basically, an R20 corner block in the City of Belmont is R30 if you knock down the existing dump and build some nice shiny new mcmansions.
EDIT: there are other requirements, so read the scheme, talk to council, talk to WAPC etc.
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ah, i see. mcmansions to sell for $350K along with all the other ones on the market.
But Council loves them... more rates
3) build to rent but sell in less than 5 years - you would not claim back any GST during construction and would 'charge' GST on sale (don't do this!!!)
I dont agree with that proposition. Firstly if the intention was to retain the property long term and circumstances meant you were forced to sell wouldnt suddenly turn it from being a capital asset and excluded from the gst turnover into a trading asset or profit from an isolated transaction.
Even if it did mean gst on sale you could claim back the gst you paid during the construction phase by making an adjustment provided it was within the relevant time period.
I dont agree with that proposition. Firstly if the intention was to retain the property long term and circumstances meant you were forced to sell wouldnt suddenly turn it from being a capital asset and excluded from the gst turnover into a trading asset or profit from an isolated transaction.
Even if it did mean gst on sale you could claim back the gst you paid during the construction phase by making an adjustment provided it was within the relevant time period.
It would only be if I did a reno and rented out the house and some disaster happened and I had to sell. I wouldn't be claiming any gst expenses on the reno, but I wouldn't want to be in a position where I had to sell and then realise I have to pay gst on the sale.
