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Hi
I have now got myself across the trustee co and trust structures available for property investing, and the various associated costs. My questions, though, relate to GST:
– Do I need to register the new trust for GST? Are there pre-defined limits that dictate whether I have to do this?
– If I buy a residential property from a private owner, on which there would be no GST charged, and then I sell the property post renovation, do I need to pay 10% of the final purchase price to the tax office even though I didn't pay any GST on the way in? This would seem to significantly erode any available profit on sale, even though I might be able to recover the GST on the renovation costs
In broad terms, the specific investment I have in mind is to buy a house for $720,000, spend $60,000 – $70,000 on renovations plus other costs (interest, stamp duty etc) and sell the newly renovated house for $900,000
Any guidance on these questions will be gratefully received!
Cheers
JamesHi James,
You only need to register for GST if you are carrying on a business, and your turnover from that business exceeds $75,000. Also, turnover does not include any 'input taxed income', such as residential rents or interest.
If you are doing renovations to residential property, then generally you would not need to register for GST, and, from your example, there would be no need to remit any GST on the sale of the property.
GST is only applicable on the first time sale of brand new residential property.
It would pretty much need to be knock-down and rebuild to be significantly / structurally different to be considered a new residential property.
No GST issues for most renos.
E
Grow SMSF | Grow SMSF
https://growsmsf.com.au
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Thanks for these comments – they have cleared this up for me perfectly
Cheers!
