gst

[stirling]

I am looking at a commercial property, having previously never dealt with commercial before.
What is the story on GST on purchase price and on rent payments?
The property is owned by the bank from a repossession, the tenant is lined up but not signed up.

(The search facility on this forum does not recognise GST - minimum word size for search is 4 letters)

 

[DaleGG]

Hi Stirling

Originally posted by stirling
I am looking at a commercial property, having previously never dealt with commercial before.
What is the story on GST on purchase price and on rent payments?
The property is owned by the bank from a repossession, the tenant is lined up but not signed up.

A lot depends upon the purchase price and the rental income that you expect to receive.

If the rental income is greater than $50,000pa then you should register for GST before settlement and buy the property under the margin scheme which means that the GST that you pay should be minimal, if any at all. You will charge 10% GST on the rent that you receive and all outgoings paid to you by the tenant.

If the income is under $50,000pa from rent of this property then you should register for an ABN and not for GST as you will not charge GST on the rent at all.
Have fun

Dale

 

[bundy1964]

Just my opinion
I would register for both an ABN and GST.
The margin scheme is best if your not GST registed ( GST is not claimable under the margin scheme. ) Paying GST on the full purchase price will alow it to be claimed back in the same 1/4 that it was paid as well as the GST on purchase costs. You can also claim the GST on your running costs instead of having to wait for tax time. Tenants expect to pay GST on there rent and they claim it back as well. ( and they say it's a simple tax system )

 

[stirling]

Simle tax system ???#%!

I understand from talking to the ATO that I can register for GST. No GST payable on purchase if it is "a supply of going concern". I could then cancel my GST registration and not require GST on rent.
(rent is less than $50,000pa)

Stirling

 

[bundy1964]

It is only a going concern if it has a tenant in place at the time of the sale. Minimum time to be in the GST system is 1 year so rent will include gst. I would choose to opt in and claim the 10% back off the purchase price and the GST of the start up costs.