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  • Applying GST to property

    If you supply property and are registered or required to be registered for GST, the sale may be either:

    • Taxable – you're liable for GST on the sale and can claim GST credits for anything purchased or imported to make the sale (subject to the normal rules on GST credits)
    • GST-free – you're not liable for GST on the sale, but you can claim GST credits for anything purchased or imported to make the sale (subject to the normal rules on GST credits)
    • Input taxed – you're not liable for GST on the sale and you can't claim GST credits for anything purchased or imported to make the sale
    • Mixed – a combination of any of the above.

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    Contract of sale

    If GST is applied to a property transaction by a supplier, the contract should clearly state if it is subject to GST or not.

    Where applicable the contract should include one clause that states:

    • the contract price includes GST
    • the purchaser is required to pay GST separately to us at settlement and the contract sale price to the supplier
    • if GST and the margin scheme applies and, if so, the margin rate. This may be in a separate written agreement.

    You should also consider whether to include any clauses that limit the liability of the supplier or purchaser if the GST treatment included in the contract is later found to be wrong.

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    Settlement adjustments

    When selling a property there may be adjustments for costs such as council and water rates.

    These adjustments are part of the amount payable for the property. They must be included:

    • on your activity statement at G1
    • when determining the amount of GST to include at 1A.

    See also:

    • GSTD 2006/3 Goods and services tax: are settlement adjustments taken into account to determine the consideration for the supply or acquisition of real property?

    Claiming GST credits when purchasing property

    You can claim input tax credits for the GST included in purchases of goods or services for your GST-registered enterprise. We refer to this as a 'GST credit'.

    You can generally claim GST credits if you purchase property or land for your enterprise under a standard land contract, if GST was included in the sale price. You claim this GST credit in your activity statement for the tax period in which settlement occurs.

    You can't claim GST credits when you:

    • aren't registered (or not required to be registered) for GST at the time of purchase
    • only paid the deposit under a standard land contract (wait until the sale has been finalised)
    • purchase an existing residence
    • purchase a property as a private sale, including the family home
    • purchase or construct new residential property for rental purposes
    • purchase property as part of a GST-free supply of a going concern or GST-free farmland
    • purchase property or land using the margin scheme
    • purchase residential property, such as a room, unit or an apartment, which you lease to a business that supplies it as hotel accommodation with other facilities.

    If you are entitled to claim GST credits, you must:

    • hold,a valid tax invoice issued by the supplier when you lodge your activity statement.
    • claim them within four years of the due date of the activity statement for the reporting period the credit is claimable.

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      Last modified: 04 Oct 2019QC 21960