Residential property
Find out what are the GST obligations for new and existing residential properties.
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Overview
GST only applies to the sale of certain property types if the seller (vendor) is registered or required to be registered for GST purposes.
A residential property includes houses, units, flats and more. It refers to residential property that provides shelter and contains basic living facilities. It doesn't include vacant land.
A property is a residential property:
- if it can be occupied
- is occupied or is intended to be occupied as a residence
- or for residential accommodation, regardless of the length of occupation.
New residential property
Most purchasers are required to pay a withholding amount from the contract price at the date of settlement.
This applies to:
- new residential property
- land that could be used to build new residential property (potential residential land).
The purchaser pays the withholding amount directly to us rather than to the property supplier.
If you're selling a new residential property or potential residential land, you have to work out if you are carrying on an enterprise. This may be the case, even for one-off transactions.
If this happens, you:
- can claim GST credits for purchases made in constructing the property for sale
- will need to account for GST on the sale of your property.
If you are not carrying on an enterprise for GST purposes, ensure that you meet your income tax obligations, including CGT.
Meaning of new residential property
A new residential property is a property where any of the following apply:
- it hasn't been sold as residential property before
- it's been created through substantial renovations
- new buildings replace demolished buildings on the same land
- one of the properties above that has been rented out for
- less than 5 years
- more than 5 years but it has been actively marketed for sale while it is rented.
Buying and selling off the plan
An off-the-plan purchase occurs when you enter into a contract to purchase new residential property before construction is completed.
At this stage, you're purchasing a contractual right to have the property built. Generally, you pay a deposit and sign a contract with a developer. You pay the balance of the purchase price on settlement.
On settlement, you're purchasing new residential property and the purchase price will include GST. You may be required to pay this GST amount directly to us under GST at settlement.
Selling a property you are buying off the plan
If you sell the contractual right to have the property built, before settlement:
- the activities involved in selling an off-the-plan property may constitute an enterprise
- you may need to register for GST
- GST may apply to that sale.
For more information about GST and property, see:
Existing residential property
Existing residential property is residential property that is not new residential property.
You can't claim GST credits for anything you purchase when selling existing residential property and you're not liable for GST on the sale.
If you sell existing property and part of the building contains residential property and part is commercial property (mixed supply), GST may apply proportionately to the commercial part on the sale.
If you purchase existing residential property, the sale from the vendor to you is input taxed, so you can't claim a GST credit on the purchase.
Rent and bonds from residential property
Rent and bonds aren't subject to GST. If you lease residential property, or receive a bond or security deposit for leased residential property, you:
- aren't liable for GST on the rent you charge, or on the bond or security received
- can't claim GST credits for anything you purchase or import to lease the property.
The GST treatment of property also varies depending on the type, whether it’s residential (new or existing) or commercial property.