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GST Margin Scheme Mortgagee Sale

Discussion in 'Accounting & Tax' started by Summersky, 16th Oct, 2015.

  1. Summersky

    Summersky Member

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    This is a question directed to the fellow accountants here.

    Can the GST margin scheme be applied on a property being purchased under a mortgagee sale?

    I've heard that the answer is No, but I cannot find any info confirming this.

    Just wondering what you guys think?

    Cheers

    Andrew
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Residential?
    New?
     
  3. Summersky

    Summersky Member

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    I was actually only asking hypothetically. But for the sake of simplicity, let's say commercial.

    Does the mortgagee have the ability to pass the margin scheme on?
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The mortgagee would step into the shoes of the owner of the property so if the owner could have applied the margin scheme then the mortgagee should be able to - I think.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Very easy to answer. What does the contract of sale say ?? Its the ONLY determinant of the margin scheme.
     
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The mortgagee in possession is not the legal owner. A trustee relationship
     
  8. Summersky

    Summersky Member

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    Ah ok so the fact that the mortgagee is involved doesn't necessarily mean the margin scheme cannot be applied.

    Thanks for clarifying this

    Cheers,

    Andrew
     
  9. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    You may expect that the bank / ATO may "garnishee" vendor proceeds where a mortgagee sale is involved but this is just a settlement issue. The REA trust account will also become involved and you could be asked to consent to release of funds. Check with lawyer if that occurs. Most important is that the lender is onboard with the sale so that delays don't occur.