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  • Holiday apartments in commercial residential properties

    If you have an apartment that is part of commercial residential premises, it's treated like other residential rental properties. You're not liable for GST on related income and can't claim GST credits for related purchases.

    While commercial residential premises are generally subject to GST, an individual apartment doesn't, by itself, have the characteristics of commercial residential premises.

    On this page

    Leasing

    If you lease your apartment to either a guest or a management company (to use as part of commercial residential premises), you make an input taxed supply of residential premises. This means you:

    • are not liable for GST on the income
    • can't claim GST credits for anything you purchase or import to lease the premises.

    As with any rental property, you must declare the income you receive in your income tax return, and you can claim tax deductions for many of the associated expenses.

    Example: Leasing out your apartment to a management company

    Aiko owns a strata-titled apartment. When she leases her apartment to Mink Management Services (MMS) the supply is input taxed.

    MMS will group Aiko's apartment with other apartments in a complex and let them out as serviced apartments.

    Even though Aiko's apartment is located within commercial residential premises, her apartment doesn't, by itself, have the characteristics of commercial residential premises – it is residential.

    This means Aiko:

    • isn't liable for GST on the income
    • can't claim GST credits for anything she purchases or imports to lease the premises.
    End of example

    Selling

    If you sell your apartment it's considered residential premises and is input taxed, regardless of whether it's located within commercial residential premises. This means you:

    • are not liable for GST on the income
    • can't claim GST credits for anything you purchase or import to make the sale.

    If you make a capital gain when you sell your apartment, you may need to pay capital gains tax, just as you would when selling any rental property.

    Last modified: 01 Jul 2022QC 23638