GST on Commercial Property Purchase with SMSF

Hello,

I have a question regarding GST when a SMSF purchases a commercial property.

My SMSF is registered for GST.
I plan to buy a commercial property in the near future with the SMSF, with borrowing.
The property is likely to be vacant at the time of sale, and therefore not a 'going concern'.

I have been doing a LOT of reading on the ATO website and elsewhere to determine if claiming back the GST (about $40k) will be a straightforward process, and if there are any associated traps or pitfalls.
I found a number of things that I couldn't clarify, they are:

1. I found one or two references that made mention of different rules if the property was build before 2000. In my case it will pre-date 2000.
2. I also noted circumstances around 'where the seller has used the margin scheme to calculate GST'..
3. And what if the seller is not registered for GST..

I'd like to know exactly what circumstances will permit the return of the full amount of GST and any circumstances surrounding the transaction which could prohibit the GST being refunded.

MANY thanks,
b73.

 

Hi there,

If the property is vacant at the time of purchase then correct you will be subject to GST. At this time your fund would be registered for GST. After settlement, you will simply lodge your BAS and claim the GST on sale of property and this will be refunded to your SMSF. IT is straightforward and assume you will be registered for Quarterly BAS for your SMSF.

Of course, depending on your state, ensure you have your Bare Trust set up before or at the time of the contract and ensure you seek advice for the name on the contract of sale as this will have stamp duty implications in the future.

EDIT - if the property is in QLD you will need to execute the bare trust before the date of the contract.

Hope that helps

Cheers Ivan

 

Thanks Ivan.

I was aware of the requirement in Qld to have the bare trust established beforehand.
It's comforting to know that claiming the GST back is a straightforward process when buying a property when no lease is in place.

Is anyone able to comment on what may happen in these circumstances?:

1. I found one or two references that made mention of different rules if the property was build before 2000. In my case it will pre-date 2000.
2. I also noted circumstances around 'where the seller has used the margin scheme to calculate GST'..
3. And what if the seller is not registered for GST..