We recently received a question from one of our landlords about apartments that are part of commercial residential premises and what GST rules apply.
The following is directly from the ATO’s website:
If you have an apartment that's part of commercial residential premises, it's treated like other residential rental properties.
You're not liable for GST on related income and can't claim GST credits for related purchases.
While commercial residential premises are generally subject to GST, an individual apartment doesn't, by itself, have the characteristics of commercial residential premises.
Leasing
If you lease your apartment to either a guest or a management company (to use as part of commercial residential premises), you make an input taxed supply of residential premises.
This means you:
- are not liable for GST on the income
o can't claim GST credits for anything you purchase or import to lease the premises.
As with any rental property, you must declare the income you receive in your income tax return, and you can claim tax deductions for many of the associated expenses.
Selling
If you sell your apartment it's considered residential premises and is input taxed, regardless of whether it's located within commercial residential premises.
This means you:
- are not liable for GST on the income
o can't claim GST credits for anything you purchase or import to make the sale.
If you make a capital gain when you sell your apartment, you may need to pay capital gains tax, just as you would when selling any rental property.
Source: https://www.ato.gov.au/general/property/residential-rental-properties/holiday-apartments-in-commercial-residential-properties/
Jason Gwerder
Thursday, 15 November 2018
