Planning to build or renovate property for sale?
20 June, 2022 BY Bibek Nepal, CPA

Planning to build or renovate property for sale?

If you buy land with an intention of developing it for resale at a profit, you will be considered as carrying out a business and so, may be subject to GST (even if you are not a business).

Similarly, if you acquire a property with the intention of renovating and selling it at a profit, you will be considered as carrying out a business and so, may be subject to GST (even if you are not a business).

Even a one-off property transaction as above may be considered an enterprise or business activity and may be liable for GST.

You may, however, use the GST margin scheme (if eligible), to reduce GST payable on the sale of the property.

Under the margin scheme, GST is calculated on the sale as 1/11th of the margin as opposed to 1/11th of the sales price.

You can generally claim GST credits for your construction costs.

Please note that a purchaser is required to withhold the GST amount from the contract price and remit it to ATO.

If you are engaged in or planning to develop a property for sale, please contact us to check if you can use the GST margin scheme to reduce your tax.

Disclaimer: This article is provided as general information only and does not consider your specific situation, objectives, or needs. It does not represent accounting or tax advice upon which any person may act. Implementation and suitability require a detailed analysis of your specific circumstances. Before taking any action, consider your own circumstances and seek professional advice.

About the Author

Bibek Nepal

Director & Consultant

Bibek is passionate about helping his clients to save their taxes, manage their finances and help them grow their wealth. He has extensive knowledge, experience, and skills in individual taxation, small business accounting, taxation, and advisory services. He is a qualified Chartered Accountant from overseas and a member of the CPA Australia. Learn more at www.linkedin.com/in/nepalb

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