I am an IP virgin. Am considering a 4 pack block of flats on the outskirts of Brisbane as my first buy. +CF, the building is 30 years old on one title, but was built to a standard that can be strata titled.
I am unclear when GST applies to develpment changes of a property, and hence whether I should buy the flats on the margin scheme. A town planner and accountant told me if I strata the units, it might attract GST. If I just on sell the block as is, I won’t.
Any help appreciated.
Bruce
Mooloolaba, QldBruce
Having had our own ATO ruling on this very question I can speak with a degree of authority.
Firstly in Brisbane the age of the property does not decide whether you can Strata Title the property only whether you are required to comply with the new Building Standards Code. If the Building was constructed prior to the Building Act of Feb 1974 then you are required to comply with the new building code with regards to fire rating etc.
Should you lodge an application to Strata Title the block converting it to 4 separate titles you are not required to pay GST on the individual sales. If you refurbish the building as long as the refurbishment does not alter the building itself (i.e construct another lightweight story on top, remove walls etc) then the end sale price does not have to include GST.
Bear in mind than you are unable to claim any GST credits along the way for any general “Non substantial work” carried out.
Maybe better to refurbish the property at the same time as you are constructing new units on which you will pay GST !!!
Cheers Richard
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Richard, thanks a ton for sharing quality info. I have been in touch with an architect, town planner and local council, so am reasonably certain that the building conforms with Pine Rivers town plan for strata titling.
As for additions etc, the block is 32 perches and I had considered converting the two ground floor flats for wheel chair access (remove walls between toilet and bathroom), and adding a free standing 5th flat down the back of the block behind the current 6 carports. But the town planner felt the set backs would suffocate this.
Your info re GST on individual sales of strata flats is much appreciated. Two accountants could not clarify for me. I understand though if I do sell off each flat individually, I am up for refinance and stamp duty costs. Do you have an opinion on this?
Once again, thanks for quality input.
Cheers
Bruce
Mooloolaba, Qld
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