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AnnaZ(Newbie)Newbie
3 Oct 2023

Hello ATO Community,

I have a question regarding the GST expenses for a scenario in which I acquire a sizable residential land with an existing dwelling. I plan to renovate the existing dwelling and construct two additional properties for future sale. Could you please advise on the appropriate method for claiming GST expenses related to the renovation of the existing dwelling, subdivision costs, and construction expenses for the new properties? Additionally, if circumstances arise where the new properties cannot be sold and are instead rented out, would there be a need to make GST adjustments? Thank you for your assistance.


thanks!



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DanielleATO(Community Support)Community Support
4 Oct 2023

Hi @AnnaZ,


If you are purchasing the land with the existing dwelling as a business transaction. You can claim GST credits for GST included in purchases for your GST-registered enterprise. We have a great page for claiming GST credits when purchasing property.


If you are planning on developing properties to sell. You are correct that if you are unable to sell the properties and decide to rent them out. You may need to make a GST adjustment on your activity statement if you bought, sold, or rented a property and your actual use of the property is different to your intended use. This is called a change in 'creditable purpose'.

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Most helpful reply

DanielleATO(Community Support)Community Support
4 Oct 2023

Hi @AnnaZ,


If you are purchasing the land with the existing dwelling as a business transaction. You can claim GST credits for GST included in purchases for your GST-registered enterprise. We have a great page for claiming GST credits when purchasing property.


If you are planning on developing properties to sell. You are correct that if you are unable to sell the properties and decide to rent them out. You may need to make a GST adjustment on your activity statement if you bought, sold, or rented a property and your actual use of the property is different to your intended use. This is called a change in 'creditable purpose'.

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