Hello there
when buying a commercial property such as factory/warehouse with office as well, the price paid is for land and building.
Is the tennant normally responsible for fixtures and fittings?
how about property inspections? are they done in same way as residential and done annually?
who is normally responsible for upkeep of the premises?regarding the purchase,
the owner pays stamp duty on the purchase,
does owner also pay GST? if so, how is that calcutaled?thnaks for your help guys
HarpFirstly…You need to qualify who owns the fixtures and fittings. With comercial properties the tennant, who has a much longer lease than with traditional residential leases, often spends good money to set up the premises to suit themselves. The owner will always be responsible for the maintenance of the buildings themselves and any outbuildings , driveways etc.
Inspections… you can negotiate how often you want inspections done although 3 monthly is probably an unnecessary inconvenience.
There are sopme great benefits in Comercial property… for example the leases are moch longer giving you some security in tennancy. Also the usual arangement is that the commercial tennant pays all the VO’s or various outgoings such as Rates Water Rates Insurance Managment fees etc so the rent you recieve is all yours!!
Regards the purchase…I think different states have different rules but in WA the purchaser pays stamp duty as with residential.GST is dependant upon the structure of the current owners.If they are registered for GST they have to charge it. If they are not registered for GST the cant charge it.
If you are registered for GST you can claim it back. If you are not registered for GST you cant claim it back it just becomes part of the purchase price. However (and you need to talk to an accountant about this) there is a thing called ‘going concern’ that if you qualify changes the GST rules again.
Talk to your accountant.
JodieWith commercial property, you do need to register for both ABN & GST.
It is important as well that when purchasing a commercial property with a tenant that the going concern clause is completed. Otherwise, ATO will enforce GST on the sale price.
Thanks for the replies
so if going concern clause is exercised, then no GST to pay on the sale price?
also can an indivdual person or trust structure register for GST and an ABN?
thanks
harpOriginally posted by harpeau:also can an indivdual person or trust structure register for GST and an ABN?
Indivdual person is sole trader and yes a trust can register for GST & ABN also a business name (to save the XYZ Pty Ltd as trustee for the XYZ trust).
CATA
Asset Protection Specialist
[email protected]No GST is payable provided there is a tenant already in place. If the property is purchased without a tenant, GST is applicable.
Actually you DONT need to register for GST just because its a commercial property.
You have to have an ABN, but you only need to register for GST if your income is going to go over the $50,000 mark.
I have had commercial property for a few years and do not have to be registered for GST. Also the term ‘going concern’ as far as I am aware has a clause that states that where the income is mainly derived from renting the premise…..going concern does not apply. Go to the ATO website and read everything you can to inform yourself before you go ahead. I am of the opinion that going concern is related to the sale of an operating business only.
If someone can prove me wrong please do because i stand to save a lot of money if that is the case.
JodieThanks for the replies
answers are a little confusing thoughcan someone tell me, if i purchase a commercial property and tennants are in place, do I have a GST liability to pay on top of the purchase price for the property? (not talking about paying GST on the rent)
thanks
harpSuggest you follow up on Midford and Deputy Commissioner of Taxation(2005) AATA623.
The tribunal ruling is very clear that both supplier & recipient need to address & document their GST intentions in regard to the supply by expressly agreeing in writing that it is a supply of a going concern.
Hey Harp,
No, you do not have to pay GST on top of purchase price if the property has a tenant currently in it at time of transfer.All the best,
DematioLuke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
To continue on about a commercial property, when you purchase, how much (%) stampduty is payable?
Cheer
BenI have recently purchased a commercial property with a tenant (Retail shop-Swimming pool sales & service) and a three year lease remaining. I have paid no gst under the going concern rule. My conveyancing was done throuigh a solicitor.
I am now looking ito developing the property further-can anyone give me information on building cost regarding tilt up slabs?
I have a 200m2 block-brick building and I want to build an extra 2 x 200m2 metre shops.
Originally posted by harpeau:Thanks for the replies
answers are a little confusing thoughcan someone tell me, if i purchase a commercial property and tennants are in place, do I have a GST liability to pay on top of the purchase price for the property? (not talking about paying GST on the rent)
thanks
harpOriginally posted by igrapleu:To continue on about a commercial property, when you purchase, how much (%) stampduty is payable?
Cheer
BenThe stamp duty is scaled-however in qld on $500,000 it is $16000 approx.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
