We have been warned that when we sell a property we have reno’d the GST will be taken from the full sale price. Is this correct? If we buy a property for $180k, spend $40k on the reno and achieve a sale price of $260k, the (approx) $30k profit (after purchase and hold costs) becomes a tiny $6.4k if you have to pay $23600 GST!!! We hope this isn’t so….appreciate some help.
bren
Bren
Think someone is having a lend on you.
In a case like this any GST payable would be based on the margin scheme being 1/11 of the margin between the sale price and the purchase price. You would have claimed input credits along way.
In saying this GST is not always payable on a residential property unless of course this a business for you and you are GST registered.
CGT is also payable on the capital gain only (difference between the sale price and the original purchase less adjustments) If this is a business and you are doing this regularly it will be treated as trading income and not CGT.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New 100% Shared Equity scheme coming soon – Email us for details.Richard Taylor | Australia's leading private lender
Hi bren the builder
GST only kicks in if you do a reno that constitutes “making it new”
My accountant made me aware of this when I started. He sent me some examples from the ato it is GSTR 2003/3
The renovation needs to be substanstial and needs to effect the building as a whole.
If you send me your email address I will send you a copy of it.
Basically, I gut kitchen / bath / laundry and refit, then patch / fix / paint everything else and this does not consistute New.
Celeste
Celeste is correct the ATO wording is “Substantial Renovation” but insaying that if Bren is a registered Builder it will make not much difference.
We have a company that buys and renovates blocks of units and obtain a private ruling from the ATO on just this.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
