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Danielle19(Champion)Champion
19 Apr 2024

Hi dear,


My client bought property in 2017. Until 1/7/2022 it was rented out.


On 1/7/2022, the client demolished the existing house and built 3 units and registered for GST.


Two of units was sold on completion on 1/7/2023 and he paid gst on sales. The third unit was used as main residence from the first day of the new built 1/7/2023.


If the client wants to sell property now, is this main residential property considered as "new residential property"? Does he need to pay GST of the sales?


Best Regards


Danielle

444 views
9 replies
444 views
9 replies

Most helpful response

Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
21 Apr 2024

The main residence unit should be exempt from GST on sale.


If GST was claimed on this unit, then it needs to be paid back on change of purpose.


Difficult area, so best if ATO could comment.


All replies

TobyJDodd(Devotee)Registered Tax Professional
19 Apr 2024

Hi @Danielle19


The property is new residential property and subject to GST if sold within the 5 years.


The crux of the matter is whether your client was undertaking a “Enterprise”


In my view, as the 3 units were built together, you client is undertaking an “Enterprise” and GST will apply.


Opinions on this will vary.


I suggest you contact the ATO early engagement team.


Toby

Liked by Danielle19
Danielle19(Champion)Champion
20 Apr 2024

Hi Toby,


If the client needs to pay GST on selling the third unit. He has claimed GST on construction for the unit, does he need to pay back GST since it was his main residence?


Danielle

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