GST and selling units

[hematite]

If I have a three unit development and want to sell two off soon after they are finished, do I need to pay GST on the two units?

If yes, then what if I rent them out for 6 months, then can I sell them without paying GST?

I'm not interested in what 'can' be done, but what the right thing by the law is.

 

[Ausprop]

is an enterprise - GST due

 

[Terry_w]

New residential property has GST on the first sale - within 5 years.

Speak to your accountant.

 

[hematite]

is an enterprise - GST due

Thanks for the clarification.

New residential property has GST on the first sale - within 5 years.

Speak to your accountant.

Thanks Terry, will do when they get back from a big Christmas break!

Here's the ATO website I just found for those that may read this thread in the future:

http://www.ato.gov.au/General/Prope...ding-and-construction---residential-premises/

 

[perthguy]

Here's the ATO website I just found for those that may read this thread in the future:

http://www.ato.gov.au/General/Prope...ding-and-construction---residential-premises/

That's useful and really clear about rental properties. But what about a PPoR? If I built a house to live in, moved in straight away planning to live long term, but decided to move out after 4 years, would GST apply? What about after 6 years? Would it still be considered a "new residential premises" because I had never rented it out?

 

[hematite]

That's useful and really clear about rental properties. But what about a PPoR? If I built a house to live in, moved in straight away planning to live long term, but decided to move out after 4 years, would GST apply? What about after 6 years? Would it still be considered a "new residential premises" because I had never rented it out?

That's a very good point, and one I would be interested in. Using a common sense approach, I would expect GST to not apply, but in the end it's the tax man's word.

 

[perthguy]

That's a very good point, and one I would be interested in. Using a common sense approach, I would expect GST to not apply, but in the end it's the tax man's word.

I'm just on the ATO web site now trying to figure it out. To be clear I:

1) create a new block from an existing block
2) build a house on the new block
3) move in on completion and live there as my sole PPoR
4a) move out and sell after 4 years
4b) move out and sell after 6 years

I am curious as to whether 4a and 4b are both considered "new residential premesis"

 

[Ausprop]

building a PPOR is not considered to be engaging in an enterprise usually, unless you do it repeatedly or are something like a builder where it is difficult to argue otherwise.

check out the bantacs website "how not to be a developer"

 

[sanj]

I'm just on the ATO web site now trying to figure it out. To be clear I:

1) create a new block from an existing block
2) build a house on the new block
3) move in on completion and live there as my sole PPoR
4a) move out and sell after 4 years
4b) move out and sell after 6 years

I am curious as to whether 4a and 4b are both considered "new residential premesis"

a lot of it comes down to your intention but it sounds like you need specific advice and not internet opinions.

 

[Scott No Mates]

If I have a three unit development and want to sell two off soon after they are finished, do I need to pay GST on the two units?

Your sales price will be gst inclusive. You will need to remit 1/11th of the sales price as GST (unless you are registered for GST and are using the margin scheme - ie you have paid GST on the works and using these credits against the sale price).

See your accountant six months ago.

 

[perthguy]

a lot of it comes down to your intention but it sounds like you need specific advice and not internet opinions.

I will definitely get specific advice before I do anything. Internet opinions usually give me ideas about what to ask, so I can do some reading a get the concepts in my head before I start talking to professionals. This has worked well in the past.

 

[perthguy]

building a PPOR is not considered to be engaging in an enterprise usually, unless you do it repeatedly or are something like a builder where it is difficult to argue otherwise.

check out the bantacs website "how not to be a developer"

I was reading that again last night but I don't recall anything about selling a PPoR.

 

[perthguy]

building a PPOR is not considered to be engaging in an enterprise usually, unless you do it repeatedly or are something like a builder where it is difficult to argue otherwise.

check out the bantacs website "how not to be a developer"

Yep. It's obvious really but I couldn't see it written down. How not to be a property developer clearly states:

"Now if you did not build the house for resale at a profit and are not registered or required to be registered for GST you can sell the house without any GST concerns."

It's pretty obvious really. I am building a house to live in and would only sell it if I had to. Otherwise I will be living there long term, so no issues when I eventually do sell up and move on.