we started building 2 houses on a land (subdivision project) with a plan to sell after completion. we claimed the gst on construction and goods from the beginning.
once the construction is completed, in case we changed our mind and rent the properties, I understand we need to pay the gst back in 5 years depends on when we sell them.
do we need to pay any penalty to ATO as well?
TIA
we started building 2 houses on a land (subdivision project) with a plan to sell after completion. we claimed the gst calculation on construction and goods from the beginning. once the construction is completed, in case we changed our mind and rent the properties, I understand we need to pay the gst back in 5 years depends on when we sell them. do we need to pay any penalty to ATO as well? TIA
If you decide to rent instead of sell, you’ll usually need to repay the GST credits you claimed since residential rent is input-taxed. There’s no penalty if you adjust it correctly through your BAS, but make sure to do it on time and keep clear records to avoid any interest or issues with the ATO.
You usually won’t be penalized as long as the change of intention is sincere and the GST adjustments are made correctly; simply repay the input tax credits in proportion.
Good question – this situation comes up a lot with property projects. If you originally claimed GST credits on construction with the intention to sell, but later decide to rent instead, the ATO usually treats that as a “change in creditable purpose.” That means you’ll need to adjust and pay back the GST proportionally (often spread over 5 years under the adjustment period rules).
From what I’ve seen, it’s not usually a penalty unless there’s been deliberate misreporting – it’s more about correcting the input tax credits you previously claimed. Best to keep good records and disclose the change to avoid issues.
https://onlinegstcalculators.com/If you want to run some quick scenarios (e.g. repayment amount if sold in year 3 vs year 5), you can try this GST adjustment calculator: Online GST Calculator – it makes it easier to visualize how much could be owed back.
Have you already finished building these houses?
You will have to return the GST credits if you rent rather than sell, but there won’t be any penalties if you report it correctly.
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