Hi Everyone,
Is it true that if you build a new house and sell it within 5 years you will need to pay GST on the sale price? My accountant tells me no if it's a one off, but will only pay CGT based on the valuation. My understanding was you are still required to pay GST regardless if it's a one off time or a business transaction.
Can any one clarify this for me?
Thanks
Basically, as the vendor you will be wearing the gst ie you won't be charging gst on top of the sale price (unless it is commercial property and you are registered for gst).
Hi Scott, i understand what your saying. But if the new build and sell was a once in a blue moon would i be exempt from paying GST?
You will be exempt from paying GST if you sell after 5 years. If you sell during the first 5 years you will pay GST. 20% of the amount per year. e.g. sell after 2 years and you are up for 3 years worth i.e 60% of the original GST amount.
Oscar
Goes to show how much my accountant knows!
Time for a new one Joe!
Oscar
You’re right. I was going to debate this with him yesterday but wasn’t sure.
Yes, you may not have to charge GST on a new build in some circumstances.
The ATO has a tool you can use to determine.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I think this is where the GST margin scheme comes into play.
The GST would be claimable on the construction cost.
You then have to remit 1/11th of the uplift (i.e. the margin).For example land worth $300k, and construction cost of $250k + $25k GST.
Claim the $25k GST back. So total cost of $550k.
Property sold for $700k. Margin is therefore $400k. ($700k – $300k).
GST payable on sale would be about $36k.
So overall you have paid $11k of GST ($36k – $25k).Hope this makes sense and as usual get your own advice.
Look at p 9 http://www.bantacs.com.au/booklets/How_Not_To_Be_A_Developer_Booklet.pdf f you are not registered for GST possibly not
@crj thanks.
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