Advice welcome.
If I was to buy a block of land and engage a builder to build a 2 Unit Duplex, will I be required to pay GST on the sale of the Units?.
I am an individual PAYE tax payer and not in the business of developing.
That is a difficult question. I think it comes down to when you sell and your intention. New property is supposed to attract GST on its sale – but I think the land portion will be GST exempt because it is not new. However, if you were to rent them out for a while and then sell, they will no longer be new and therefore GST may not apply.
if you do have to apply GST to the sale, then you may be able to claim the GST you were charged on materials which should offset the pain a bit.
have a look at wwwbantacs.com.au and the booklet on "how not to be a property developer".
And speak to a good accountant now.
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
robertsp wrote:Advice welcome.
If I was to buy a block of land and engage a builder to build a 2 Unit Duplex, will I be required to pay GST on the sale of the Units?.
I am an individual PAYE tax payer and not in the business of developing.
The law looks at your intention, ie, whether you are buying a capital asset as a long term investment or whether you are buying to develop and sell. For GST purposes, even if you are not carrying on a property development business, one-off profit making undertakings constitute an "enterprise". It seems to me that the latter applies to your circumstance. My view is that the duplexes will be considered "revenue assets" (as opposed to "capital assets") for both GST and income tax purposes. Therefore, given that the sale proceeds of the properties will be counted towards the $75K annual turnover threshold, it is likely that you will be required to be registered for GST, which means that you will be subject to GST on the sale of new residential premises. Having said that, depending on a few factual issues, you may be able to reduce the GST by way of using the "margin scheme" if eligible.
Terryw wrote:That is a difficult question. I think it comes down to when you sell and your intention. New property is supposed to attract GST on its sale – but I think the land portion will be GST exempt because it is not new. However, if you were to rent them out for a while and then sell, they will no longer be new and therefore GST may not apply.if you do have to apply GST to the sale, then you may be able to claim the GST you were charged on materials which should offset the pain a bit.
have a look at wwwbantacs.com.au and the booklet on "how not to be a property developer".
And speak to a good accountant now.
Terry many thanks. I'm seeking advice from my accountant.
eddiec wrote:robertsp wrote:Advice welcome.
If I was to buy a block of land and engage a builder to build a 2 Unit Duplex, will I be required to pay GST on the sale of the Units?.
I am an individual PAYE tax payer and not in the business of developing.
The law looks at your intention, ie, whether you are buying a capital asset as a long term investment or whether you are buying to develop and sell. For GST purposes, even if you are not carrying on a property development business, one-off profit making undertakings constitute an "enterprise". It seems to me that the latter applies to your circumstance. My view is that the duplexes will be considered "revenue assets" (as opposed to "capital assets") for both GST and income tax purposes. Therefore, given that the sale proceeds of the properties will be counted towards the $75K annual turnover threshold, it is likely that you will be required to be registered for GST, which means that you will be subject to GST on the sale of new residential premises. Having said that, depending on a few factual issues, you may be able to reduce the GST by way of using the "margin scheme" if eligible.
Many thanks for your considered reply. I'm seeking advice from my accountant.
Hi all,
My husband and I pull in about $100 000 a year combined income. My part-time portion is only $30 000. If I was to buy a property under my name only and renovate it to on sell, would I have to pay GST on the profits? If so then what rate would I expect?
Thanking you,
Tina
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