In a commercial property listing, when looking at the price I have noticed the term '+GST (if applicable)' tacked onto the end.
The property is vacant and has been dormant for a long time.
I understand GST needs to be added to the cost for a commercial property, and in situations where the property is already tenanted when purchased, the purchaser does not pay GST as discussed here:
https://www.propertyinvesting.com/forums/commercial-property/4346795
Considering this property is vacant and not habitable without major works, I'm just wondering about the 'if applicable' wording in this instance.
Are there any other situations (other than buying a going concern) where GST may not be payable?
Say, for example if my intentions are to convert it to residential use — STCA — do I still pay GST?
Com RE aren't tax experts so the wording is a bum covering exercise. It's up to sellers and buyers to work out the gst implications.
See ATO
GST and property – Commercial residential premises
http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/00198744.htm&page=10&H10
GST and property – Going concerns
http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/00198744.htm&page=20#P395_25881
Thanks for the links Freckle.
Cheers,
dgirl
dgirl wrote:Are there any other situations (other than buying a going concern) where GST may not be payable?
If the property that you are purchasing is zoned/has existing use rights as residential.
Hi,
Most people selling real estate lump in +GST (if applicable) because they don't know whether GST applies or not, so they are covering their backsides just in case it does.
My strong recommendation is that if you are buying / selling commercial property then always get an opinion about the applicability and implication of GST before going unconditional (buying), or getting the contract written (selling).
One trap to really watch put for when selling is having an agent use 'standard wording' that glosses over GST when you need specific wording, such as when you need to apply the margin scheme. This cost be $50,000 once. Ouch!
All the best,
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Have to talk to a good Commercial real estate lawyer…but
1) you wont make money until you put a tenant in
2) you will pay GST unless a going concern.
So optimally would like to try and sign up subject to being able to find and place a tenant in the property prior to settlement. So that it settles as a going concern.
I'd love to know how to do this (suitable contracts for both "your" tenant and the sales terms). On the surface it could be an excellent strategy if you can pull it off.
Cheers
Wobbly
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