GST and Property

Has the introduction of the GST had an effect on buying and selling? We have provided the following information to help answer some of the questions that you may have regarding GST and property.

Buying a residential property and the GST implications

• GST will not generally apply to the purchase price of residential properties that are not new (whether for investment or owner occupation), where the property is occupied as a residence.
• GST will apply to the cost of new residential property purchased directly from a developer and it will be included in the price for the construction of a new home.
• GST will apply to the purchase price of new vacant residential land sold by a registered vendor such as a developer. "New" land is defined as land not having been previously sold as residential land. However, GST will not apply to the resale of vacant residential land.

Selling a residential property and the GST implications

• In most cases the GST will not apply to the sale price of existing residential real estate, including the family home.
• GST will apply to agent's fees and advertising costs agreed to when entering into a Selling Agency Agreement. GST will apply to the newly constructed residential properties by a developer who is registered for GST.
• GST will not apply to the sale price of any existing residential property irrespective of whether it is a family home or an investment property. GST will however apply to the sale price of newly constructed homes, including investment properties, which are sold by a developer who is registered for GST.
• GST will apply to the sale price of new vacant residential land sold by a registered vendor, such as a developer. GST will not apply to the resale of vacant residential land.
• In most cases, the sale of a home by the original owner/builder will not be subject to GST unless that home was built in the course of, or futherance of, their building enterprise.
• Whether the auction price includes the GST will depend on the type of property being auctioned and whether GST is applicable to the proceeds of the sale. For the sale of private residential property there is not GST, however, commercial property may attract GST and accordingly the auction price will be GST inclusive. The auctioneer will be required to announce before the sale whether the auction is being conducted on a GST inclusive or GST exclusive basis. The auctioneer will also need to announce whether the vendor is registered for GST.