How does GST affect buyers and sellers?

Oct 10, 2022, 16:48 PM
Title : How does GST affect buyers and sellers?

Does GST apply to the proceeds of the sale of the family home?

No, the Goods and Services Tax (GST) does not apply to the proceeds of the sale of existing residential real estate, including the existing family home, unless the home was built by an owner-builder in the course of their enterprise in which case it will be the sale of new residential premises i.e. a taxable supply.

Does GST apply to the sale of homes by the original owner builder?

In the majority of cases, persons who sell homes they built themselves (owner builders) are not subject to GST. The exception to this is owner builders who construct a dwelling in the course or furtherance of their building enterprise and who would be required to register for GST.

Does GST apply to all expenses associated with owning a residential property?

GST applies to most expenses associated with owning an investment property (such as repairs and maintenance, management fees, accountancy costs, postage costs and advertising) unless the acquisition of the goods or services is from an unregistered entity.

However there are two important exceptions; GST will not apply to rates and taxes, and financial services such as bank fees and interest charges, associated with owning a rental property.

Does GST apply to the sale price of an existing home?

No, GST does not apply to the sale price of residential properties that are not new.

Does GST apply to the supply of vacant residential land?

GST applies to the sale of vacant residential land notwithstanding that it may have been sold previously if the entity selling the land is registered or required to be registered for GST.

The supply is made in the course or furtherance of the entity’s enterprises, the entity makes the supply for consideration and the supply is connected with Australia. However the parties to the sale of land may consider the application of the Margin Scheme to reduce the amount of GST payable on the sale.

Does GST apply to the sale price of newly developed vacant residential land?

GST applies to the sale of newly developed residential land by developers who are registered or need to be registered for GST.

Does GST apply to the price of newly constructed homes?

GST applies to the cost of building a new home and to the supply of a new home purchased directly from a developer who is registered or needs to be registered for GST. In such cases, GST will be included in the contract price for the construction of a new home. The GST will replace existing sales taxes.

Does GST apply to real estate agent's management fees?

Yes. GST applies to the agreed fees that real estate agents will receive, including sales commissions and property management fees.

Does GST apply to fees for services provided by real estate agents?

Yes. GST applies to the agreed fees that real estate agents will receive, including the sales commission and property management fees.

Does GST apply to the Letting Fee that the owner pays the real estate agent?

Yes. GST applies to the agreed fees that real estate agents will receive, including letting fees, sales commissions and property management fees.

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