Gst!

[Hubush]

I recently viewed a sale of contract for property. I had noticed under the GST section that nothing was marked & left blank!
I rang the REA & he was vague, but basically said that it was an old house & no GST was applicable!

Is this gospel? I think not!

I thought that every sale was affected by GST one way or another except for vendors PPOR when selling. But as a purchaser GST either fell under margin scheme or taxable supply!

My understanding- margin scheme pre- year 2000 (old dwellings)
Taxable supply post- year 2000 (new dwellings)

Note: If property was bought under margin scheme, when resold, you have option of selling under margin scheme or as taxable supply. However, if bought as Taxable supply, it must remain this way if property is on sold at a later date!

Could someone clarify my confusion

 

[MarkB]

Hubush

As this is a subject that interests me, I decided to have a look on the ATO website - what a waste of 20 minutes that was.

So then I tried the Real Estate Institute of Australia. Still no luck.

Resorting to a google search, I came across this:

http://www.linandrews.com.au/gst/property.php

I hope that helps.

Mark

 

[Simon]

It is my understanding that GST is only payable on new dwellings. Second hand ones are exempt.

Cheers,

 

[JoannaK]

The margin scheme applies to property held by vendors prior to July, 2000 who are registered for GST purposes. It generally applies to commercial property, or residential property sold for business purposes, ie development sites.

It requires the vendor to have a valuation undertaken as at July 2000, and GST is paid on the margin, or difference, of the valuation and the eventual sale price.

Also, brand new developed property can only be sold under the margin scheme when the developer purchased the property under the margin scheme initially. In this instance, the developer can sell the property under the margin scheme...but can also choose to sell as a Taxable supply only if the purchaser is registered for GST.

Either way, GST is still payable...it's just that the margin scheme GST is calculated differently.

If nothing was marked on the boxes of your contract, then the default is the option usually in CAPPED lettering.

Generally, GST applies to the following properties:

Commercial Property

Residential property where the vendor is registered for GST, and has claimed GST when they purchased

Residential property that is new or substantially renovated (this means structural renovations, not cosmetic ones)

GST does not apply to 2nd hand (usually more than 12 months old) property.

I hope this helps.

 

[Hubush]

Hi Joannak,

In response to your comment re: 2nd hand property (usually more than twelve months).

I thought for a property to be classified 2nd hand it would be 5 years for GST exemption! Or is this from a new development site only