Need answers to your GST and property questions?

We have released a new interactive goods and services tax (GST) property tool, which can assist you to correctly treat and report GST on your clients' property sales and other property related transactions.

The topics covered include:

• sale, lease or purchase of real property, including residential premises, commercial residential premises, commercial premises and vacant land
• claiming GST credits
• margin scheme eligibility
• GST-free supplies of real property.

To access the tool, refer to GST property tool.

Extracted from ATO eLink 43/2011

Guide to property

Overview

Your home is generally exempt from tax. If you have an investment property, build or renovate for profit, or use a property in the running of a business, there may be implications for income tax, capital gains tax and goods and services tax (GST).

Your home

In most cases there are no tax implications for the home that you live in, and no tax implications when you sell it. This situation may change if you rent out part of your home or use it for work, or it's on more than 2 hectares of land. If you're saving for your first home, you may be eligible for government contributions to help you build your savings quickly.

Inheriting a dwelling

There are usually no capital gains tax implications at the time you inherit a dwelling. Capital gains tax may apply when you subsequently sell or otherwise dispose of the dwelling.

Residential rental properties

If you rent out property to others, you must declare the income in your tax return, and you can claim tax deductions for many of the related expenses. You may have to pay capital gains tax when you sell the property.

Vacant land

Vacant land is generally a capital asset that is subject to capital gains tax. However, if you purchase the land for resale to earn a profit, or use the land in a business-like way, it is considered trading stock. In this case you treat proceeds from the land as ordinary income, and you may need to register for GST.

Subdividing

If you subdivide land - including if you subdivide land adjacent to your home - the subdivided land will generally be subject to capital gains tax. However, if you purchase land to subdivide and resell for a profit, or use the subdivided land in a business-like way, the proceeds may be treated as ordinary income and you may need to register for GST.

Property development, building and renovating

If you build new residential premises for sale, you'll be liable for GST on the sale and entitled to claim GST credits for related purchases. If you renovate a property and sell it for a profit, there could be implications for income tax, capital gains tax and GST.

Property used in running a business

If your property is used to run a business - whether it's commercial premises like a shop or office, or even your own home - there will be income tax implications while you own it and capital gains tax implications when you sell. You may also be liable for GST, and entitled to claim GST credits, when you buy, sell, lease or rent commercial premises.

Property - home

Last Modified: Wednesday, 5 October 2011

Extracted from ATO Website http://www.ato.gov.au/content/00262404.htm

Clarifying GST Rules Around Residential Property

The Hon Bill Shorten MP as assistant Treasurer for Financial Services & Superannuation has made a Press Release to clarify how residential property is treated for GST following a Full Federal Court decision last year that found GST was not payable on the full value added to premises by developers in some circumstances. Full details are available in the Press Release.