Guide
GST and property: sales, rent and the margin scheme
How GST treats residential and commercial property, new homes, going concerns and the margin scheme.
Property is a special case
Property transactions can involve large amounts, so getting the GST treatment right matters. The key questions are whether the property is residential or commercial, whether it is new, whether the seller is registered or required to be, and whether the sale is part of an enterprise.
Residential property
The sale of existing residential premises is input-taxed, so no GST is added and the seller cannot claim credits on costs related to it. The sale of new residential premises by a seller who is in the business of building or developing is generally taxable. Residential rent is input-taxed.
Commercial property
The sale of commercial property by a registered seller is generally taxable and the sale price includes GST, which the buyer can often claim as a credit if registered. Commercial leases are generally taxable too, so rent includes GST.
Going concern
The sale of a business as a going concern, including its property, can be GST-free if the buyer is registered, the price covers everything needed to continue the business, and the seller carries on the business until the day of sale. A written agreement that records the parties' intention to treat the sale as GST-free is needed.
The margin scheme
Under the margin scheme, the seller pays GST on the margin, which is the difference between the sale price and a base amount, instead of one eleventh of the full price. The agreement must be in writing before settlement. The buyer cannot claim a credit on the purchase price when the margin scheme is used.
Get advice
Property GST is a place where a mistake can cost thousands. Speak to a registered tax professional and read the ATO guidance before you sign a contract.
← Back to Glossary Open the GST calculator Browse the glossary