GST treatment of real property

Summary of GST status of real property
Type of property	Example	GST treatment
Sale	Real Property
Residential	Existing residence	input taxed (No GST on Sale)
New residence	Newly built or substantially renovated	Taxable (GST on Sale)
	or built to replace
Commercial	Residential Hotel, motel, boarding house	Taxable (GST on Sale)
Commercial property	Factory, office	Taxable (GST on Sale)
Farm Land	Sale to farmer	GST-free if sold on the basis that it will
		Continue to be used as farm land
Going Concern	Sale of property as part of an enterprise (business)	GST-free if conditions satisfied
Income	Rental Real Property
Commercial	residential
* short-term	Hotel	Taxable (GST on income)
* long-term	boarding house / on site caravan	input taxed concession (Div 87)
Commerical Property	Factory, office	Taxable (GST on income)

Any transaction involving real property is important to understand how GST may apply. The GST applicable can be complex as it will depend on a number of factors

Type of Property Involved

Vacant Land Sales

Commercial Property

Commercial Residential Property

Residential Premises – Non Commercial

- New or Used

- Substantial Renovations

- Demolition & Rebuild, Duplex, Small Developments &  battle- axe blocks

- Change of Use

Parties to the Contract

Is the property transaction considered an Enterprise, if so GST will be applicable.

Are the parties to the contract registered for GST or required to be registered for GST.

 Date of Contract

Method of Calculating GST

- Margin Scheme calculates the GST on the profit margins.

- GST Adjustment periods and when applicable

GST Property Decision Tools – to help determine the GST Treatment of the Property Transaction

GST Property Tool       

                           GSTR 2009/4  ATO Ruling on how to calculate GST Adjustments on changes in use (creditable purpose)                   

We can help with -

Reviewing any real property  purchases, developments, to ensure the GST treatment is fully understood and optimised for your situation.