Apartment Specialists Podcast No: 82
Do you want to sell your apartment, but you recently found out it has GST owing? Can you still sell it? In this podcast, Andrew will answer these questions as he gives a definitive guide to selling apartments with GST. Learn the necessary steps to successfully market your apartment, and to eventually sell it on the property market. All these and more from this podcast.
Good day, Andrew Murray from the Apartment Specialists talking about Auckland apartment sales.
You’ve found out your apartment has a GST component – i.e. you owe GST. So, when does it happen that you don’t have to pay that GST back? Let’s say, it will be when your apartment is being used commercially – i.e. it’s under hotel lease, and let’s say you’ve got a lease on your apartment and it goes on for another five years and you come to sell your apartment.
When you sell it to the next buyer, what you do is you sell it with a purchase price plus GST, not inclusive, and you’ll see that on the Sale and Purchase Agreement – you can cross it out. Then what happens is, the person who is purchasing the apartment either has to pay that GST or if they’re keeping it in the lease – if it’s locked in for another five years – it’s called zero rated, and that GST – what I call the monkey – gets passed on to the next person.
So, the good way to look at it is, if you’re selling your apartment and it’s in a hotel lease and there’s a GST component in it and that lease is getting passed on to the next person and that person is also GST registered, then the GST monkey gets passed on and you don’t have to pay for it.
Where you do have to pay for it is, if that person isn’t registered for GST and what will happen is, on the Sale and Purchase Agreement – you’ll be very careful with this – it will say, “This is the selling price inclusive of GST”, which means, you – being the person selling – you have to pay it back.
Now this can sound all very confusing and I don’t want to go on for ages explaining it, but the best way is if this rings any bells, go and talk to your accountant and they’ll tell you the whole process, or give me a ring and I can go through it with you properly. But yes, there are times when you owe GST and you don’t have to pay it back because the unit is still being used commercially and the next person who is purchasing is still GST registered.
I hope that helps. Cheers.