The sale and lease of commercial residential premises is subject to goods and services tax (GST).
Commercial residential premises include:
- hotels, motels, inns
- hostels, boarding houses
- caravan parks, camping grounds
- other establishments that provide similar services to the above.
For GST purposes, retirement villages are not commercial residential premises.
If you buy commercial residential premises, you can claim a credit for the GST included in the purchase price if you are registered for GST and if either:
- the seller did not use the margin scheme to work out the GST
- the sale was not a GST-free sale of a going concern and the seller was registered, or required to be registered, for GST.
A going concern is a business that is operating and making a profit.
You may also be able to claim a GST credit on other expenses, such as solicitor's fees, that relate to buying the property.
If you sell commercial residential premises, you're generally liable for GST on the sale price. This means you:
- pay GST equal to one-eleventh of the sale price (unless you use the margin scheme to work out the GST)
- can claim GST credits on purchases that relate to selling the property (subject to the normal rules on GST credits) – for example, the GST included in a real estate agent's fees.
If you're registered (or required to be registered) for GST, your GST liability depends on what you provide:
- short-term accommodation – when a guest stays for less than 28 continuous days, you're liable for GST
- long-term accommodation – when a guest stays for 28 or more continuous days, concessionary GST treatment applies
- primarily long-term accommodation – if at least 70% of your guests stay for 28 or more continuous days, concessionary GST treatment applies.
- GSTR 2012/7 Goods and services tax: long-term accommodation in commercial residential premises for more information about concessionary treatment
- GST and commercial property
- Holiday apartments in commercial residential properties