Hi all,
I just searched this thread (started by me few weeks back).
So, after due diligence, my friend is going to buy this commercial property for his dine-in restaurant.
PP is $260+GST.
Question 1:
The broker has indicated, If my friend buys the property in his name and the lease to his business, he can show earning from the property and hence can get a higher LVR (may be 75-80%). Can he do that? Is it a good suggestion?
I supposed it's possible however as Aaron has stated, if it's uncovered you'll either see is lowered LVR or no loan at all (depending on the lender) as most financial institutions see their risk as doubling in that scenario.
Also bear in mind the bank will wish to see a copy of the lease and may wake up to your illusion once they see the lease beginning on the same day of settlement.
In that scenario, they may rescind their offer and your mate will be left hunting around for finance at the last minute and the potential of losing his deposit.
Question2:
Will he get the GST back, if he buys in his own name and lease to his business? I think he & his wife are the sole trader with business name which is registered for GST. But I doubt he or/and his wife are themselves registered for GST.
In VIC, if it's a "going concern", meaning there is an existing lease in place, no GST is applicable. If however it's empty, then GST is applicable and you will need to apply back to the Govt to have it refunded in your next BAS and if you need to submit a BAS, you'll need an ABN. If it's the later, then prepare for the the following:
* You'll most likely be audited by the ATO as they hate seeing large sums of money being returning without a normal history. It won't be a problem but be prepared to wear the cost from your accountant when it happens.
* To register for an ABN, you'll need to have a paper trail with names attached which could lead to complications regarding your scenario in Question 1.
Muddy waters indeed....
Question3:
The conveyancer said stamp duty will be applied at PP+GST and not at only PP. Is that correct? Double dipping by government?\
I also suspect this may be correct as I vaguely recall complaining about this on our last purchase.
Horrible to think that the govt is charging taxes on taxes too but it does happen...
Thanks
Sanjay