I am wondering if someone could please give me some advise on a property listing we have looked at in Oamaru?
We first looked at this property several months ago when it was listed for offers over $680K. That was more than we were willing to pay, given the work needed on the house and the usability of the land. A month or so later we noticed the listing had been updated with the price now offers over $650K. We asked to have another viewing but were told it was under offer. That listing was due to expire today. Today the listing has updated again, this time to enquires over $649K + GST.
Our query is on the GST part. We have never seen a residential property listed this way. Is this legal, and why would they do it that way? The GST significantly raises the price from what it was originally listed for. The house is not being run as a farm or any sort of commercial business as such, although in the past it has had rooms listed on AirBnB. We know it is owned by a stock agent, with the land used for a handful of sheep and chickens. Please could someone share a link that explains how charging GST on a property like this works? Thank you.

tam-n-sav - 2021-01-25 15:57:00

It's probably not strictly a residential property, given that it has been used for Air BnB and possibly a small farm. You really ought to be talking to a lawyer and/or accountant. If you are not using the property for business purposes (Air BnB and/or farm), make your offer on what you think it is worth, and let the vendor deal with the GST.

allan_mac - 2021-01-25 16:24:00

Beautiful property, I like that very much. Love the wood.

Make your offer INC GST as the vendors personal tax circumstances are not your issue.

sparkychap - 2021-01-25 17:22:00

The seller may well be prepared to accept less than 650K...including GST!

committed - 2021-01-26 07:12:00

The seller would have claimed the GST back when he bought it as a “fattening unit”
That means that he has to pay 15% of the sale price back.
He won’t like having to pay the GST on the capital gain he’s made over the years so that will be why he’s trying to sell it plus GST.
As everyone has said, make sure you state ‘including GST if any’ on your offer.
Good luck, hopefully the seller is getting tired of trying to sell it by now and accepts your offer...

lovelurking - 2021-01-26 07:39:00

Well I’m going to be selling my lifestyle block Later in the year and will definitely be charging gst on the land. It’s a legal requirement.

sher5 - 2021-01-26 09:40:00

sher5 wrote:

Well I’m going to be selling my lifestyle block Later in the year and will definitely be charging gst on the land. It’s a legal requirement.

Its not a legal requirement to charge GST on a lifestyle block - it all comes down to your own GST status.

sparkychap - 2021-01-26 09:55:00

sher5 wrote:

Well I’m going to be selling my lifestyle block Later in the year and will definitely be charging gst on the land. It’s a legal requirement.

No, it is not.

johnston - 2021-01-26 10:20:00

sparkychap wrote:

Its not a legal requirement to charge GST on a lifestyle block - it all comes down to your own GST status.

No, the buyers, maybe.

We sold a productive lifestyle block and were GST registered. The buyers bought it for non-business purposes so paid no GST.

tony9 - 2021-01-26 14:33:00

tony9 wrote:

No, the buyers, maybe.

We sold a productive lifestyle block and were GST registered. The buyers bought it for non-business purposes so paid no GST.

In which case, you are then required to repay the GST to IRD that you originally claimed when you purchased the property.

hulloitsme - 2021-02-05 09:31:00

hulloitsme wrote:

In which case, you are then required to repay the GST to IRD that you originally claimed when you purchased the property.

The seller is liable for the GST on the sold price of the land less the value of the residence and curtulage. The seller is required to pay with 'real money' unless the buyer is registered for GST and is also going to use the land for purposes aligned to the registration in which case it becomes a 'virtual' transaction between the IRD and buyer/seller parties. GST is technically not part of an items 'value' it is a tax which is calculated from the value ie 15%. However for many end user retail goods and services the gst component is added to the value giving the 'price'.

Edited by brouser3 at 6:44 pm, Fri 5 Feb

brouser3 - 2021-02-05 18:41:00

I am guessing the listing agent works for a particular rural company that always advertises residential property as plus GST if any. It is just a nonsense as there is no GST on residential property, unless it is a business transaction. ie a rental.

Edited by ebygum1 at 8:02 am, Sat 6 Feb

ebygum1 - 2021-02-06 08:02:00