Clients often ask if there is any GST when buying a commercial property. The GST treatment will depend upon the GST registration status of the seller.

Normally attached to the offer and acceptance is a GST annexure. This annexure will stipulate how the GST will be applied. On commercial properties there are 3 possible outcomes.

1) The seller may not be GST registered and therefore no GST would be applied.

2) The seller is registered and they advise that GST will be charged in addition to the price

3) The seller is registered and both parties agree to use the GST Margin scheme.  This means that the price is inclusive of GST but the purchaser is unable to claim any GST back and

4) If the seller and purchaser are registered for GST and the property is being sold with an existing tenant, then the contract may agree that the property is being sold as a ‘going concern’ and therefore no GST would be applied on the transaction

If you are buying the premises for business purposes and will be registering for GST then any GST you pay will be claimable as a refund from the ATO on the next Business Activity Statement.

Pro Tip
Transfer Duty is charged on the total value of the transaction including GST. This means that a purchase of a property GST free is going to be cheaper than purchasing another property of the same value plus GST even though ultimately you are refunded the GST later.

Author: Stacey Walker