Real Estate Sales & GST
New laws come into effect from the 1st of July, 2018*
WILL THIS APPLY TO YOU?
You need to find out if your sale of real estate sale will trigger a liability to pay Goods and Services Tax (GST).
A seller (vendor), of a typical residential real estate, is highly unlikely that you that you will have to pay GST on your sale.
However, you are ultimately responsible for determining your tax position, and so it is important to do some homework on the GST and how it may affect your property sale.
The general rule or principle The general rule or principle re GST, is that it is a tax on supply. The person who is making the “taxable supply” (vendor), is the person who has to pay the GST.
The purchaser, however, pays the GST when the seller’s contract with the purchaser requires the purchaser to pay, or to reimburse the seller, for the GST the seller is required to pay. Overall most people are familiar with prices advertised as $+GST.
Thus, although it is the seller who must pay the GST to the Australian Tax Office, GST is ultimately paid by the consumer.
The difficulty with GST is in determining whether or not it is payable by the seller, so that the seller knows when to require the purchaser to add it to the cost of what is being purchased.
GST IN REAL ESTATE SALES – NEW NOT OLD NO GST – SECOND HAND RESIDENTIAL REAL ESTATE
NOT payable on the sale and purchase of “residential premises”, unless the property being sold is ‘new’ property.
Second-hand - Residential real estate (E.g House, Flat or apartment lived in) will rarely incur GST. Therefore most ordinary sales of residential real estate no GST. The purchaser cannot be made liable to pay an amount for GST in this instance.
Exempt - It doesn’t matter if the property is owner occupied or an investment property, so long as it is residential property and it is not new.
(VERY IMPORTANT: Selling vacant land - Assume that GST will be payable unless your tax accountant instructs you otherwise. Vacant land is not ‘residential premises’.
Confused? It is often difficult to determine whether a property is ‘residential premises’ for the purpose of GST. Speak to your financial adviser & or Accountant.
SELLING CHANGES
All properties sold from 1st January, 2025, will have to obtain a ‘clearance certificate’ from the ATO prior to settlement. This extra requirement imposed on Vendors could cause additional stress to anyone who has not completed a tax return in the last two years, as the ATO will not issue the certificate unless tax returns are up to date. If no clearance certificate is issued, then 15% of the sale price must be withheld at settlement and given to the ATO. The money has to then be applied for in the next financial year tax return. This means the money can be tied up until completing the next financial year's tax return.
CONVEYANCING COSTS CALCULATOR
We offer a free online calculator that estimates conveyancing fees based on the property's location and whether you're buying or selling. Take advantage of a commitment-free calculator that provides a cost breakdown and copy via email. Go to our pricing tab for a fixed-fee calculator that provides tailored quotes for each client.
AVERAGE COST OF CONVEYANCING
Conveyancing fees depend on a variety of factors such as the type of property and its value, but a typical conveyancing fee ranges between $700 and $200 in Victoria. Researching and handling the relevant legal requirements is covered by a single disbursement fee, which is usually around $400.
What are the average conveyancing fees? Conveyancing fees in Victoria, including Melbourne and regional areas, fall within a range of $1400 but could be as cheap as $990.
How much does conveyancing cost? Average conveyancing costs or fees can start anywhere from $500 and go as high as $2,500 for a complex transaction or even higher...”
NOTE – Selling property owned by a company, or held by a trust, then it is even more essential you obtain advice from your accountant & or financial adviser.