GST claimable on holiday house purchase?

[Julian]

My company has signed up to by a house. Upstairs will be used for holiday accomodation. Downstairs will be as office for company headquarters, garaging for company cars, and accomodation for the caretaker of the upstairs house. The caretaker, in this instance, will by myself - sole shareholder and sole director of my company. My company is a property investment company with a number of commercial holdings.

After purchase, can I claim the total GST portion back ie one nineth of the purchase price?

I will, of course, be speaking to my accountant about this but was interested in the opinions of any experts in this forum. Appreciate your replies.

Julian

[hawkeye]

Hi Julian,

Providing the entity that bought the property and intends to run the Holiday Home is registered for GST and charges and pays GST on the monies you get for the stays then absolutely. Possibly only for the % of the building used for the Holiday House activity.

The reason I say that is short term accommodation in the nature of a hotel is taxable activity but I think you'll find caretaker accommodation is a non-taxable activity.

Let us all know what the Accountant says!!!

Good luck with your venture. Where are you based?

We've got short stay places in Wellington and Marinborough and Gatekeeper on the Forum has a place in Lower Hutt.

N

[Julian]

Accountant says that because the predominant purpose and area of the house is for GST payable activity then the whole house is claimable for GST costs against the purchase.
The obvious down side is that when (if) the place is sold one nineth of the sale price of the property will have to be sent off to the IRD - which is to be expected.
Julian