GST & Rental Properties

We often get asked if there is a GST component in a Sale and Purchase Agreement for a rental residential property, or if GST needs to be claimed on the purchase of something for the property. 

The answer is no to both questions. Why? Residential rent is viewed as a "GST exempt supply" of services. Exempt supplies are goods and services which are not subject to GST and not included in your GST return.

IRD give these guidelines:

• GST can't be charged on the rent for a residential dwelling. A landlord can't claim any GST on dwelling expenses, such as maintenance, rates and insurance.
• If a residential dwelling is sold as part of a taxable activity, and it was rented for at least five years beforehand, the sale is an exempt supply.
• If a property developer acquires a property for the principal purpose of making a taxable supply and then subsequently rents the property out, a change of use adjustment may be required.

For more info, see this page at the IRD website, or  contact us.

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