GST and residential property
Generally, selling or renting existing residential premises are input-taxed sales and do not include GST.
However, if the residential premise is considered 'new', it is a taxable sale and GST is applicable.
If you buy property – old or new – with the intention of selling it at a profit or developing it to sell, you may be considered to be carrying on a business and may be required to register for GST.
Generally, you are not considered to be carrying on a business if your property transactions are for private purposes, such as when you are constructing or selling your family home.
See GST and residential property for more information.
Sale of residential premises
Existing residential premises
If you sell existing residential premises, your sale is input-taxed. You can't claim GST credits for anything you purchase for the sale, and you are not liable for GST on the sale.
New residential premises
If you sell a new residential premises, you are generally making a taxable sale, which means you:
- can claim GST credits for any related purchases you make (subject to the normal rules on GST credits)
- are liable for GST on the sale. See GST and the margin scheme for a way of working out the GST you must pay when you sell property as part of your business.
A residential premises is new when any of the following apply:
- it has not previously been sold as residential premises
- it has been created through substantial renovations
- a new building replaces a demolished building on the same land.
For more information, see GSTR 2003/3 When is a sale of real property a sale of new residential premises?
A residential premises is no longer new if it has been 5 years since:
- it first became a residential premises
- it was last substantially renovated
- it was built to replace demolished premises
Commercial residential premises
If you sell new or existing commercial residential premises, you are generally making a taxable sale. You can claim GST credits for purchases you make in relation to the sale of commercial residential premises and must pay GST on the sale. See Commercial residential premises and GST for more information.
Rental of residential premises
If you rent out residential premises for residential accommodation, your rent is input taxed and you don't include GST in the rental charge. You also can't claim credits for the GST included in any costs relating to the rental, such as agent's commission or repairs and maintenance on the premises.