Conversion of Use of Property from Office to Residential

[DaveW]

Yes some developers would get a friendly accountant to allow them not to pay that GST. But it's technically fraud. Also, I got asked by ASB once if that GST had been paid, I had to get a letter from my accountant saying so. I think they have been caught out by that in the past.

Yeah it would need quite a lot of looking into.

I'm not saying don't pay the GST you've taken it out of context. As stated in the rest of the post I'm saying most developers and experienced investors would choose the resell option hence no GST for a straight conversion.

[Davo36]

**** me, in a cafe, just did a huge long post and lost it...

Are you saying to keep it as a commercial development - as in claim all the GST on the conversion expenses, but then pay GST on the sales?

If so, I think it helps with cashflow, but costs more in the long run.

[Don't believe the Hype]

Davo36 - cost of the fit out and associates permits and pen pushers around $150k each. Might get some savings doing 2 so allow beteeen $220k -$300k. We’ve just costed up a similar project to split a house into 2 dwellings.

one saving you haven’t mentioned is by being a residential building you won’t have to pay separately for EQC - I understand that is a big annual cost that will go away once change of use completed.

[Davo36]

Thanks, seems I wasn't too far away with my $300k guess.

Silly though right? $300k to build 2 apartments when the land, floor, exterior walls and roof is already there.

No wonder housing is expensive in this country.

[DaveW]

**** me, in a cafe, just did a huge long post and lost it...

Are you saying to keep it as a commercial development - as in claim all the GST on the conversion expenses, but then pay GST on the sales?

If so, I think it helps with cashflow, but costs more in the long run.

No GST on sales of residential property, just the GST adjustment which you only pay back when the property ceases to be used for taxable supplies. Tenants work from residential as well.
You should be able to find a way to keep expenditure at 200k without too many compromises. A feasibility study is needed. What is the re-sale price of the completed apartments?

[Davo36]

Oh maybe $500k each.

I was expecting to be empty for 4-6 months. Office space can be hard.

But it turns out there were 3 tenants wanting to lease this space as offices. So it's leased now, deposit paid! Bit of an increase in rent too! Should have asked for more lol...

Weird, but I'll take it. Much less hassle than a conversion to apartments!