GST implications on a new 1 into 2 lot development Logan

Hi property chatters,

Currently subdividing a 1 into 2 lot development keeping the existing house and selling of the new lot with a house and land package (duel occ). Wondering if I have to consider GST into my costing's or is that soaked up with the turn key price I pay the builder?

Many Thanks

 

I recently did something similar, but cut up the block into 2 lots, I paid GST for both, but I use the margin scheme. I am no tax expert, just my scenario.

 

The builder will charge you GST and if you are registered you will be able to claim this amount back.

Depending on your circumstance (but almost certainly will be) you will be required to register for GST and will need to include GST in the sale price and remit to ATO.

 

Yes you must factor in GST. You may or may not have to pay on the sale, depending on the circumstances.

 

Thankyou so much for your replies. Perhaps i should be more specific and give a example to make sense of it, as by going by the answers so far, GST implications can vary depending on different scenarios...

Property Purchase $350,000
Land Value of property (As determined by council) $150,000

Subdivide one into 2 lots evenly split
$150,000 divided by 2 = $75,000 per lot
Plus Subdivision fees $70,000
Capital Gains tax payable for anything over the the $145,000mark for land sale..

What GST would be payable on this sale lets say if the land sold for $200,000?

Cheers, Youngbull

 

between $0 and $18,181

 

Thanks Terry. Why such a big margin (0-18,181) and not a rough estimate??
Would i only pay GST like capital gains tax if the sale of land exceeded $150,000?
Sorry, just trying to get my head around it..

 

11th of the sale price would be the max. possibly none if you are not in an enterprise. And you may be able to claim expenses too.

 

You should definitely get some advice. GST will have a big impact on your figures and you should consider if you are eligible to use the margin scheme and the requirements to do that.

You should also get some advice on the income tax side of the transaction. There is a good chance this will be ordinary income rather than capital gain.

 

Margin scheme ? Eligible ? (This may reduce GST a bit)
Strategies for when to claim GST on build costs incl architect fees etc etc
Record keeping !!
GST advice
Apportioning original lot
Income tax issues
What is strategy for the "keep" property. Sell in 4 years and there is still a GST issue. (Two actually...One about selling and other about costs)


All matters requiring advice. Failing to get advice can cost 5% in excessive GST to start. Worse is getting it wrong and penalties can compound.

 

YoungBull,

I would suggest you google "ATO GST & Property" you will find a wealth of information on the ATO website to research and if you require interpretation then pay for specific tax/gst advice from a professional.