- crashyParticipant@crashyJoin Date: 2003Post Count: 736
In NZ, properties are sold GST inclusive. Property traders may claim back not only the GST (1/9th of the purchase price) but also the GST on the intended renovation costs. Under NZ law, this must be refunded within 15 days of a claim. This means you can fund the renovation using the GST refund, or use the refund to repay the deposit.
GST – $24,000
renovation – $27,000
GST reno – $3000
GST refund – $27,000
this assists with cashflow a great deal….Playa ChickenMember@playa-chickenJoin Date: 2004Post Count: 128
Yep Crashy, you're onto it!
That's exactly how a lot of traders doing flips and renos and investors doing lease options fund their next purchase here in New Zealand. You've got to remember though that the GST refund only applies to trades, NOT buy and hold properties.
Interest rates might be a bit higher than in Oz, but the savings on getting your GST refund, NO stamp duty and NO capital gains tax more than makes up for that.
The amazing thing is that the banks actually fund 80% of purchase price INCLUDING GST . If you're really smart about choosing your settlement date you can have it all lined up so that you settle right at the end of your current GST period and you immediately claim the back, so you might only have to wait 2-3 weeks for the money!!
Before the credit crisis property traders were getting funding at 80% of registered valuation, so if you'd negotiated really well you were realistically being funded 100%. I know a lot of deals that were done that way. That easy-money has all dried up now though!!