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Edited version of private advice
Authorisation Number: 1051821056265
Date of advice: 30 March 2021
Ruling
Subject: GST and residential property
Question 1
Is the sale by you of residential property (Property) a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
All further legislative references are to the GST Act unless stated otherwise.
Answer
No, the sale by you of residential property is not a taxable supply as all the requirements of section 9-5 of the GST Act are not satisfied.
Question 2
Does the sale of the Property constitute an input taxed supply pursuant to section 40-65 of the GST Act?
Answer
As the sale does not meet the requirements of section 9-5 of the GST Act, it is not necessary to consider whether the sale is an input taxed supply.
Relevant facts and circumstances
You purchased a property in May 20XX.
You moved into that property with your family and lived there until January 20XX.
As the house was old and needed many repairs, you engaged a builder to knock down the house on that property, subdivide the block into two and build one new house on each of the two blocks (property 1 and the property in question, which is property 2).
You state that you do not have a profit-making intention, that you did not keep organised records of costs and that the subdivision was a one-off.
You did not register for GST and therefore did not claim any input tax credits.
Your intention was to live in property 1, and to rent out property 2 and have the option for your kids to live there in the future.
You entered into a contract in September 20XX with a builder for them to undertake the construction of a new house at property 2 between January and October 20XX.
In January 20XX, the block was divided into two.
In August 20XX, due to COVID-19 impacting you financially, you decided to sell property 2.
You sold property 2 in December 20XX.
You applied for an ABN in January 20XX upon the advice of the real estate agent who sold property 2. You had an active ABN from January 20XX.
The settlement of property 2 occurred in February 20XX.
You moved into property 1 in February 20XX, right after completion of its construction. You have treated it as your principal place of residence.
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