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GST in purchase price, some questions thanks

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  • GST in purchase price, some questions thanks

    Hi I have been looking at a section and the vendors are a holding company and is GST registered. Naturally they want me to pay the GST.

    Now could I ask a few questions about figuring out how much they paid.

    If homes.co.nz says the previous purchase price was X amount, assuming it was purchased from a non GST registered party?

    Is that X inclusive or exclusive of GST?

    Does the GST mean the company has not paid a cent on the GST and I suddenly have to fork out 15 % to the govt for some reason?

  • #2
    Hi Jack2016,

    General is that developer will buy. say $230k for example.

    They will claim the GST back, 30k.

    So there real cost is $200k

    Then if they sell to end user (I'm guessing you), to build a personal house or long term rental on, and to make the example easy, make no profit. - then either sell for $200 + GST or $230k inclusive of GST. $230,000 inclusive of GST would be the normal when selling to a non GST registered party.

    The developer receives $230k from you, and then pays $30k to IRD. Leaving them with $200k, so $0 profit.

    I hope this clarifies that you are not suddenly forking out the GST.

    Book a free chat here
    Ross Barnett - Property Accountant


    • #3
      Hi, that really does help. THanks again.