Selling commercial property, particularly as a going concern, or dealing with GST on property transactions such as stamp duty and new residential premises, involves intricate legal and financial considerations. Nationwide Conveyancing offers expert guidance to navigate these complex processes, ensuring a seamless and compliant transaction for property investors and business owners across Queensland.
Understanding GST in Commercial Property Sales
Selling Commercial Property as a Going Concern A “going concern” refers to an operational business with potential continuity. When a commercial property is sold as a going concern, it means the transaction includes the property and the business, allowing the buyer to operate the business without interruption post-sale.
Criteria for a GST-Exempt Going Concern Sale:
- Operational Business: The business must be operational until the sale date.
- Inclusive Sale: The sale should include all assets necessary for ongoing operations, such as equipment and goodwill.
- Written Agreement: Both parties must agree in writing that the sale is of a going concern.
- GST Registration: Both the buyer and the seller must be registered for GST.
GST and Stamp Duty Stamp duty in Queensland does not attract GST. It is a state-level tax applied based on the property’s value, separate from the federal GST.
GST on Residential and Commercial Property Sales
- Existing Residential Properties: Typically exempt from GST, categorized as “input taxed” supplies.
- New Residential Premises: Subject to GST. This includes properties that are newly constructed or substantially renovated, and land sold with a contract to build residential premises.
- Commercial Properties: Generally subject to GST unless sold as a going concern.
FAQs on GST and Property Transactions in Queensland
1. What are the benefits of selling commercial property as a going concern? Selling as a going concern can exempt the transaction from GST, making it financially advantageous for both buyer and seller.
2. Do you pay GST on stamp duty in Queensland? No, GST does not apply to stamp duty as it is a state-imposed tax, separate from federal GST.
3. When is GST applicable on property sales? GST applies to the sale of new residential premises and most commercial properties unless sold as a going concern.
4. Can I claim GST credits on commercial property purchases? Yes, if the property is used in a GST-registered business, GST credits on the purchase may be claimable.
5. What defines a ‘new residential premise’? A property is considered ‘new’ if it has never been sold as residential accommodation before, or if it has been substantially renovated.
6. What steps should be taken to ensure a property sale qualifies as a going concern? Ensure continuous operation until the sale, include all necessary business assets, make a written agreement on the going concern nature, and verify GST registration for both parties.
7. Are there GST exemptions for new residential premises? Yes, sales can be GST-exempt if structured as a going concern or under other specific ATO conditions.
8. How is GST calculated on new residential premises? GST is generally 10% of the sale price, subject to specific conditions and exemptions.
9. What documentation is required for a going concern transaction? Documentation includes a written agreement acknowledging the going concern status, proof of GST registration, and comprehensive records of assets included in the sale.
10. Can a seller apply GST to a residential property sale? A seller must apply GST to the sale of new residential premises or when the property is commercial, unless exempted under specific criteria.
Understanding the GST implications when selling commercial property or new residential premises in Queensland is crucial for compliant and successful real estate transactions. Nationwide Conveyancing is dedicated to guiding you through these complexities, providing the expertise needed to handle your property matters with confidence.
For detailed assistance or more information, contact Nationwide Conveyancing. Our professionals are ready to help you understand and manage the financial and legal nuances of your property transactions effectively.