All Topics / Finance / gst on a commercial purchase

Viewing 10 posts - 1 through 10 (of 10 total)
  • Profile photo of give90give90
    Member
    @give90
    Join Date: 2007
    Post Count: 54

    hi all
    the two times that i have bought a commercial property, i have paid the gst and then reclaimed it. is there a way around this so that the extra money does not have to be borrowed? for instance, is it possible to buy the property at the beginning of the quarter and lodge the bas at the end without having to pay the gst and then claim it back?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    On the basis that the GST is payable on the Contract price it is payable as part of the Settlement Funds.

    For cash flow purposes you might want to time the Settlement date  to tie in with the end of the quarter.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Luke TaylorLuke Taylor
    Participant
    @world-changer
    Join Date: 2005
    Post Count: 415

    Hi Giver and Richard,
    hope you guys are well !

    Give, You could try ,(if the props tenanted)
     mentioning to the seller that on a going concern the ato dont require it.

    Luke Taylor | Hope Property Investing
    http://hopepropertyinvesting.com
    Email Me

    Property Support,Strategist and Buyers Agent

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi WC

    All well this end thanks off on holiday to the US in less than 5 hours so cant wait.

    Yes no GST on a GC basis however not all Commercial properties can be sold on that basis.

    Normally if the property is vacant we suggest to clients to time the date of settlement.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of give90give90
    Member
    @give90
    Join Date: 2007
    Post Count: 54

    richard;
    all the best, have a great time overseas! and thanks for your reply.

    world changer; now you mention it, yes i remember that. AWESOME! thanks

    i would be buying it with it tenanted as a medical practise so i guess that qualifies as a going concern? it has been used as this since 1993 but the owner/proprietor is retiring. a new leasee has expressed interest  which is the basis that i would proceed upon.
    thanks again
    grace

    Profile photo of give90give90
    Member
    @give90
    Join Date: 2007
    Post Count: 54

    just a further question, knowing that richard is not here to answer it; does anyone know what he means by timing the settlement to the end of the quarter? the gst would still need to be paid and reclaimed?

    Profile photo of Luke TaylorLuke Taylor
    Participant
    @world-changer
    Join Date: 2005
    Post Count: 415

    If its tenanted ,yes you usually can claim it as a going concern and request yr solicitor to mention this in the contract
    adjustments(no gst needed (if already put in as GST payable)

    By timing it on the end of the quarter it means when you would r putting yr gst quarterly bas report in with the ato you time the contract settlement   around the same day you will receive the money back  so you are not paying months and months worth of interest only a few days at the worst

    Luke Taylor | Hope Property Investing
    http://hopepropertyinvesting.com
    Email Me

    Property Support,Strategist and Buyers Agent

    Profile photo of give90give90
    Member
    @give90
    Join Date: 2007
    Post Count: 54

    thanks world changer. the going concern thing could be great, means less borrowing.

    Profile photo of CentralChoiceCentralChoice
    Participant
    @centralchoice
    Join Date: 2008
    Post Count: 64

    Go and see a good property lawyer who knows how to structure these things.

    Back in my real estate days we sold a vacant warehouse to a national retailer, entered into a $1 lease so it would be sold as a going concern, and the lawyers created something like a put option at the same time as a call option. When the respective options were exercised, the lease was extinguished.

    The finer details are all a bit fuzzy as it was a number of years back but if I was to buy anything vacant again I would look into that first.

    Profile photo of Dan42Dan42
    Member
    @dan42
    Join Date: 2008
    Post Count: 619

    Timing the settlement means that you would have settlement date as close to the end of the quarter as possible (end of March, June, September or December) so you can then lodge your BAS for that quarter, and claim your refund as soon as possible.

    If you are lodging BAS's quarterly, and you settle at the end of January, you woiuld have to wait at least two months to get the GST refunded. Settling at the end of March means you could lodge your BAS on April 1st, and get your refund much sooner.

Viewing 10 posts - 1 through 10 (of 10 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.