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  • GST and newly built homes

    If you have built a new residential home and want to sell it or rent it out, there are some key things to keep in mind when supplying new residential homes.

    Change in creditable purpose – When there is a change in how the property is used it may result in a change in 'creditable purpose' and can alter what GST credits you can and can't claim.

    • Events can include:
      • moving into new residential property and occupying it privately, while trying to sell it
      • building to sell, but then deciding to rent it out while finding a buyer.
       

    Keep your records to help to determine if you need to make an adjustment to GST credits you've already claimed.

    GST at settlement – New residential homes, land and potential residential land may be subject to the 'GST at settlement' withholding measure.

    • If so, when settlement occurs, the purchaser pays:
      • the withheld amount of GST direct to us, and
      • the balance of the sale price of the property, minus the withholding amount to the supplier.
       
    • Once payment has been received, we match up the supplier's ABN when they lodge their BAS and the GST credit is applied to the supplier's account.
    • If suppliers don't lodge their activity statements and include the property sale, the credit can't be transferred to them. Our process video shows how this works.

    The margin scheme – Is a way of working out the GST payable when selling property as part of your business.

    Generally, the GST is based on the difference between:

    • the price that you paid for the property when you first purchased it, and
    • the subsequent sale price of the property.

    The margin scheme can only be applied if:

    • the sale of the property is taxable
    • you are eligible to use it
    • you have a written agreement with the purchaser before the settlement date to sell the property using the margin scheme.

    Our GST property tool can help you check eligibility and calculating the margin.

    Build-to-rent – This refers to residential developments built with the intent to rent out long term once complete. Build-to-rent residential accommodation is input taxed, which means:

    • you can't claim GST credits on construction and other costs relating to leasing a residential home
    • GST doesn't apply to rent you receive.

    See also:

    Last modified: 10 Sep 2020QC 63633