I am renting and 2 units next to each other on their own titles that were built last year.
I also own an older house which i rent out.1) Do i need to Register for gst to sell 1 house every couple of years?
2) Or just hang onto 1 for 12 months and pay the 50 percent CGT?
Then do the same the next year?
Basically im asking are you worse off to have to register for gst to sell investment properties?
Are you better off or allowed to just pay the 50 percent of the CGTafter 12 months?I have sold 2 properties in the past that were my Principal place of residence so didnt have to pay any tax…
Depends on the circumstances. You should seek specific tax advice on this complication area. You may or may not be entitled or required to register for GST and CGT may or may not be applicable.
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
It can vary a lot.
In general… any place you built (or new vacant land you created) will attract GST if sold in its first 5 years of ‘creation’. You can minimise the amount by using the Margin Scheme but you have to have already been registered for GST prior. The margin scheme essentially means you pay GST on the profit rather than the revenue, so for example selling one of the units for $250k with $50k profit means you’d pay $25k GST(10% of revenue) without margin scheme or $5k GST (10% of profit) with the margin scheme.
The older places will be subject to CGT, with 50% discount available if held for 12 months. A whole bunch of calculations are involved, including the acquisition costs, selling costs, whether it was your home for any period during time of ownership, etc.
There’s lots of sums and circumstances that get weighed into this – probably best to go see your tax guy.
D.T. | DT Property Management
http://www.dtproperty.com.au
Email Me | Phone MeAdelaide Property Management - whole Adelaide metro
So would the best way to go be register for GST in 5 years or now??
Then hold onto the units for 5 years and then sell using the margin scheme.How do you know if your allowed to use the margin scheme or not?
So what do builders who develop normally do when they buy a block of land and subdivide then build a few houses and sell some on seperate titles?
Do they register for gst before they start the project then use the margin scheme and just pay 10% of the profit on each sale?Thanks for everyones help!
Builders are generally conducting a business of building and selling. They would usually register for GST and claim CGT inputs along the way and then charge GST on the sale.
But this doesn’t mean it will apply to your situation. You may not be conducting an enterprise. you really do need to get expert advice on this.
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
Ok thanks, could you please explain the 5 yrs rule to me? As people have said hang on to the unit/s for 5 years…
Thanks :)
Ok thanks, could you please explain the 5 yrs rule to me? As people have said hang on to the unit/s for 5 years…
Thanks :)Basically a property is considered ‘new’ for 5 years and GST is chargeable on the first sale of new property.
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
You must be logged in to reply to this topic. If you don't have an account, you can register here.
