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  1. #11
    Join Date
    Oct 2013
    Posts
    1,583

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    As Rosco has said, just make a GST inclusive offer, for whatever you're willing to pay, buying in a non-registered entity. Refuse to split the value, it's not a legal requirement, let them split it however they like, and it's not your problem.

    You can make this as complicated as you like, but in the end it comes down to what you're willing to pay, and whether the vendor will accept it. His GST registration is none of your business, if you're not registered - which does seem to be the good option going forward given you're looking at a residential conversion.
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  2. #12
    Join Date
    Oct 2014
    Posts
    17

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    Quote Originally Posted by Rosco View Post
    As above, the vendors GST position or GST to pay doesn't matter if you make a GST inclusive offer.

    If you have to split the values, maybe get a valuation to prove it!

    Maybe get some expert advice as you are going around and around in circles and seem to be make no headway over pretty simple issues.

    Ross
    Maybe I can get a valuation done and value the business (commercial retail shop) as a going concern. However, as the commercial shop isn't on a separate title would the business be valued with the land or without it, as you can't run the business without the land? The commercial retail shop is generating approx $40k per year in income, so a valuer could use an industry average yield of say 8% and come up with a capital value of $500k for the business, but I know the land would easily be worth $1m just by itself with no buildings on it (if it was converted to residential). In other words, it's kind of like running a small business on top of a gold mine, does the valuation of the business include the gold mine below it in the eyes of the IRD?

    I did talk to another lawyer friend of mine. He was also a little confused as to how the business should be valued as it wasn't on a separate title. The only thing that separates it is on the lease which defines the boundaries which are divided roughly by 50%. It's just a weird situation because the business (retail shop) can't be sold without selling the house at the front as they are together, so their valuations are tied.


    Quote Originally Posted by Anthonyacat View Post
    As Rosco has said, just make a GST inclusive offer, for whatever you're willing to pay, buying in a non-registered entity. Refuse to split the value, it's not a legal requirement, let them split it however they like, and it's not your problem.

    You can make this as complicated as you like, but in the end it comes down to what you're willing to pay, and whether the vendor will accept it. His GST registration is none of your business, if you're not registered - which does seem to be the good option going forward given you're looking at a residential conversion.
    Yeah, that's what I'll end up doing, just putting in a GST inclusive offer and buy it as a non-registered entity. I just hope another buyer doesn't come along and offer the same amount but plus GST thus putting me in a inferior position. He might be reading this thread and will do the $1/$999999 split and then get away with only paying 15 cents GST after conversion and just give the middle finger to the IRD or pay a small fine or something, lol.

    Cheers for both you guys input.
    Last edited by Ogg; 27-04-2018 at 12:26 PM.

  3. #13
    Join Date
    Jan 2011
    Location
    NZ
    Posts
    218

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    Ogg there may be others who are keen on Live & Work properties, and therefore willing to register for GST as they have a genuine business use. I see a lot of these properties popping up everywhere as more people work from home these days.
    How did you go with your offer?

  4. #14
    Join Date
    Oct 2014
    Posts
    17

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    Quote Originally Posted by grip View Post
    Ogg there may be others who are keen on Live & Work properties, and therefore willing to register for GST as they have a genuine business use. I see a lot of these properties popping up everywhere as more people work from home these days.
    How did you go with your offer?
    Yeah, but what happens in 10 years time when land prices continue to appreciate - you'll be left with a massive tax bill the day after you close down your business. That's the issue here.

    I'm still negotiation with the seller, even the real estate agent is confused. I'll let you know what happens.


 

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