GST on residential rental?
Question from Steve updated on 1st May 2014:
We own two commercial properties through our GST registered look through company. We are about to add a residential investment property to the company ownership. We understand that the purchase and rent side of things is not subject to GST but how are other costs associated with the residential property treated? Like rates, insurance, maintenance etc? Look forward to your reply. Thanks, Steve
Our expert Mark Withers responded:
Steve, none of the costs on the residential property are in any way connected to the companies taxable activity for GST. None of the input tax on any of these costs can be claimed as the residential is only used in an exempt activity. At a practical level, if you use an electronic system like MYOB or Xero then se tup a dedicated block of codes in your chart of accounts that have the GST flag supressed so that you don't inadvertently claim the wrong things.
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.
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