At Ensure Legal, we often encounter questions from residential property investors and buyers about the treatment of GST (Goods and Services Tax) when purchasing properties. If you’ve ever been confused about how GST applies to residential property transactions, this quick guide is for you.
What is a GST Taxable Supply?
In simple terms, a GST taxable supply refers to any transaction where GST is payable. Let’s explore how this applies in the residential property space.
- Brand New Properties:
Buying a brand-new apartment or house is considered a GST taxable supply. This means the price includes a GST component. - House and Land Packages:
If you’re buying a vacant block of land as part of a house-and-land package, this is also generally a GST taxable supply.
Seller’s GST Registration
It’s important to check if the seller is required to register for GST. For example:
- Property Developers:
Developers operating a business that earns more than $75,000 annually are required to register for GST. If you’re purchasing a property from such a developer, the transaction will typically include GST. - Private Sellers:
If the seller is an individual or a business not engaged in land sales as part of their primary operations (e.g., selling less than $75,000 worth of land annually), the sale may not qualify as a GST taxable supply.
GST Withholding for Residential Properties
A key change in recent years is the introduction of GST withholding for residential property transactions. Since 2018-19, the process ensures GST compliance at settlement. Here’s how it works:
- Buyer’s Responsibility:
At settlement, the buyer’s lawyer is obligated to withhold the GST amount on behalf of the seller. - ATO Submission:
This withheld GST is then remitted directly to the Australian Taxation Office (ATO).
Final Thoughts
Understanding the nuances of GST can help you avoid surprises during your property purchase. Whether you’re buying a brand-new apartment, a house-and-land package, or a vacant block of land, knowing how GST applies—and whether the seller is registered for GST—can save you time and stress.
If you have more questions about property transactions or GST, feel free to reach out to us at Ensure Legal.
Thank you for reading, and we hope you’ve gained valuable insights into GST and residential property transactions.
