What is the GST treatment on the sale of new residential premises intended for rental use?

 Author: RachelATO(Community Moderator)Community Moderator

2 June 2026

Hi @Subashmahat4,

Yes, your client can recover GST on the earlier development costs, but this is done through the GST adjustment provisions rather than as a late credit claim.

Originally, the client intended to use the properties for input-taxed residential rental, so no GST credits were available or claimed. If they later decide to sell the properties as taxable supplies of new residential premises, this represents a change in creditable purpose.

The four-year time limit applies to standard GST credit claims, but it does not apply where no entitlement existed at the time. Instead, the change in use is dealt with under the adjustment provisions.

In this case, the client would make an increasing adjustment in their activity statement to reflect the extent to which the development costs now relate to taxable supplies. The adjustment is calculated over the relevant adjustment periods for each acquisition.

Your client isn't prevented from recovering GST by the four-year rule, the recovery arises through the adjustment mechanism rather than by claiming credits retrospectively.