GST implications when purchasing residential property

According to the Goods and Services Tax Act 1985, certain land transactions will be zero rated when a GST-registered person sell the property:

• To another GST registered person; and
• The buyer’s intention is to use them for making taxable supplies; and
• The property is not used as a principal place of residence by the buyer and any person associated with them.

It means that if you are not registered for GST, or registered but use the property as residential property, you are liable to pay GST on top of your purchase. This will happen when you are buying from a developer, but often GST is included in sale price. If transactions are between unregistered parties then there is no issue of GST.

However, there is often confusion and some transaction may be complicated when dealing with GST on a property transaction. You should seek legal advice. Please fill in the form below if you have any questions.

Reference

Goods and Services Act 1985

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