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GST on new house on Lifestyle block

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  • GST on new house on Lifestyle block

    Hi there

    We have purchased a lifestyle block and registered for GST so as to be able to re-claim it, and because eventually we would like to make a (small!) profit from it.

    We are building a house and part of the house - about 6 sq. m and half of the garage - about 17 sq m will be used for office and storage for the business (we don't have any sheds!). 23 sq metres represents about 13% of the total house. Can we reclaim GST on 13% of the build cost?

    Help gratefully received!

  • #2
    I would talk to your accountant.

    GST isn't usually applicable to residential property unless you are developing or subdividing or under taking major renovations and are considered to be a trader.

    Who actually owns the property, your business or a separate company?
    If your business owns the property then you may be able to claim that the business is renting out 87% of the property to you as a tenant - in which case IRD would want to see rental payments etc and then you would have to pay GST on some of that and it would all get very tricky.

    If a company owns it then they would be considered to be renting the office to the business, which again you would have to show rent received, however GST doesn't normally come in to play until your company makes over $60 000 pa

    I think you would be best off not even worrying about GST and charge your business rent which your business can expense.
    But go talk to your accountant and see what they say.

    What are your ultimate plans to do with the property?


    • #3
      what is the business activity?
      How big is the property?

      Generally I would be very very careful about claiming GST on a lifestyle block. If it is not a true business IRD will have issues with the GST claim.
      Also when you sell, hopefully the value of the property has increased and then you end up paying a lot more GST on the sale, as most possible purchasers will not be running a business activity.

      Book a free chat here
      Ross Barnett - Property Accountant


      • #4
        Suggestion: if you plan to make it a working
        property and make some money from it: stop
        calling it a lifestyle property, from now!

        What entity purchased the land? That may
        well have a bearing on what options you have.
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