GST and Vacant Land
BAN TACS Accountants Pty Ltd Investors Booklet - 2 - Created by Julia Hartman B.Bus CPA, CA, Registered Tax Agent
The ATO issued an Addendum to GSTR 2003/3 pointing out that the exemption from GST on domestic properties that are not brand new does not apply to the sale of land cut off from such a property.
Even if you are registered for GST you do not have to charge GST on the sale of a house if it is not the first time it has been sold as a residential property. Note if you undertake substantial renovations that affect every room in the house then the next sale of the house will be subject to GST because it is considered new again.
In order to qualify for the concession the house and land have to have been sold previously as a package. Vacant land can never qualify for the concession. This is the case even if there was once a house on the land or the block has been cut off from a house and land. Relocating a home onto land and selling it will still be considered the first sale of the house because it is the first time that piece of land and that house have been sold together.
If you buy a house and land, move the house to one side and subdivide the land GST is not applicable to the
sale of the house side because that land and house have previously been sold together but of course GST will apply to the separate sale of the vacant land. On the other hand if you add land to an existing house and land package you will have to charge GST on the sale of that part of the land because that land had never been sold with that house before.
Note if you are not registered for GST and you are not selling the land as part of your actual business activity then even though the sale maybe for more than $75,000 you are not required to register for GST. The $75,000 threshold, at which you are required to register for GST, only includes turnover that is subject to GST from normal business operations, even domestic rents are not included in this threshold because they are not subject to GST.