Margin Scheme and GST

Hi Ananth,

What is it that you are planning to do? Are you building a house/ units and then looking to sell shortly after? GST only generally applies to the sale of new residential properties or commercial properties. Your accountant would be best suited to talk to you about this one. It best to spend a bit of time getting this right, as any errors can end up costly a lot of money down the track.

However, to answer your question, in general, if you are selling a property using the margin scheme, yes you can claim the GST on the construction costs. However you should be aware that if you purchase property where the margin scheme was applied to the sale, you cannot claim a GST credit for the GST included in the purchase price of the property.

Further, the margin scheme cannot be used on the sale of your property if you originally purchased the property as fully taxable and the margin scheme was not used.

You should be aware that when it comes to buying or selling a property using the margin scheme, both parties must agree in writing at the time when the property is sold (goes to contract) that the margin scheme will apply to the sale of the property.

Cheers