GST payable on new home just sold

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H
Member
@h
Join Date: 2004
Post Count: 12
February 28, 2006 - 3:13 am
Hi All,
Hope someone can clarify this for me…
I went to a tax seminar about GST and they mentioned that GST should be neutral in that throughout the year you claim back the GST you pay on goods and services and that should more or less equal the GST you should pay on goods and services sold.
Last year I bought several blocks of land to build on. One of these was completed and sold late last year. In my BASS statements I have claimed any GST I paid on the building process and now since I have sold the property I pay GST on the sale price. However the GST I paid on the sale is a lot higher than what I paid from expenses. (because I made profit…yeh! [biggrin] Is it right that the GST doesn’t actually cancel out in the case of building new homes?
Thanks in advance
H
tonyy21692
Member
@tonyy21692
Join Date: 2003
Post Count: 128
February 28, 2006 - 3:36 am
H
You made a profit well done.
However you are going to cost yourself ,000 of $ in overpaid GST by self preparing your BAS.
By all means read up on the GST Margin Scheme on the ATO website but get your accountant to review your BAS’s. the money will be well spent.
Regards
tony
H
Member
@h
Join Date: 2004
Post Count: 12
February 28, 2006 - 9:53 am
ok, will do thanks. Hopefully she will know how to minimise the GST. (I’m sceptical because it’s been difficult finding an accountant who knows property well)
H
coastymike
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@coastymike
Join Date: 2005
Post Count: 125
February 28, 2006 - 11:04 am
I would agree that you find an accountant who can explain the margin scheme and determine whether it is suitable to your circumstances. Of course if you have already sold the property and not elected to use the margin scheme then it will be too late. However for future property sales it will be worth considering.
asdf
Participant
@asdf
Join Date: 2005
Post Count: 139
March 1, 2006 - 1:57 am
You should’ve been able to claim something on the land too. Most developers sell their land under the margin scheme so that should flow on to you too but not really sure how you apply it. From what I gather, you are out of pocket by the profits. ie. Paid $100K for land and $100K for house – $20K is GST credit and when you sell for $300K, you remit $30K to govt. I suppose if you keep making profits, GST will cut into ur margins.
Check out Julia’s articles: http://www.bantacs.com.au/booklets.php
A bit mind boggling really. Can you afford to hold and just rent out for 5 years? And cream all the depreciation off it too…