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If you have an apartment that is a part of commercial residential property, then it is treated like other residential rental premises. You don’t need to pay GST on related income and are not allowed to claim GST credits for related purchases.

What If You Rent Your Apartment?

While commercial residential properties are liable to GST but an individual apartment doesn’t, by itself, have the features of commercial residential properties.

What If You Lease Your Apartment?

You make an input taxable supply of residential premises if you rent your unit to a visitor or a management business (for use as a component of commercial residential properties). It simply means you:

  • are not subject to GST on the income
  • are not allowed to claim GST credits for purchases or anything you import to lease the premises.

What If You Sell the Apartment?

If you sell your apartment, it is considered residential premises and is input taxed, irrespective of whether it is situated within commercial residential premises. It simply means you:

  • are not subject to GST on the income
  • are not allowed to claim GST credits for purchases or anything you import to make the sale.

Supplying Commercial Accommodation

Commercial accommodation is accommodation within commercial residential property. If you need to get registered for GST or are already registered, you are subject to GST on any payments made to you for commercial accommodation. The GST amount you need to pay depends on:

  1. whether you offer long-term or short-term accommodation
  2. if your premise is usually for long-term accommodation.
  • Short-Term Commercial Accommodation

You offer accommodation for short-term when your guests stay for no more than or less than 28 continuous days. You need to pay GST of 1/11 of the price you charge for the stay.

  • Long-Term Commercial Accommodation

The accommodation you offer in your commercial residential property is:

  • referred to as long-term when your guests stay for 28 continuous days or more
  • usually, long-term accommodation if at least 70% of your guests stay there for 28 continuous days or more.

On the supply of the accommodation and incidental supplies, GST concessions apply. These supplies include:

  • electricity
  • gas
  • heating or air-conditioning
  • maintenance and cleaning
  • wifi, TV, phone, and radio.

If the service fee is being charged separately, then you are required to charge GST on your supply of these services at the normal cost.

Treating long-term accommodation as input taxed

If you select this option, you:

  • don’t pay GST on accommodation for long-term you supply
  • are not allowed to claim GST credits for GST included in the cost of Goods and Services you buy for the accommodation for long-term
  • need to apply this treatment to all accommodations for long-term for a time of at least 12 months.

Concessionary treatment for accommodation for long-term

Concessionary treatment for accommodation for long-term consists of charging:

  • full GST for the first 27 days, then reduced GST starting on day 28.

The concessionary GST for accommodation for a long term can be evaluated by calculating GST on half of the normal GST-inclusive cost of the accommodation.

Holiday apartments and units

A single unit or holiday apartment is referred to as ‘residential property’ even though it is in commercial residential property. Your apartment is an input-taxed supply if you lease it to either a guest or a property manager that uses it as a portion of commercial residential property. It simply means you:

  • are not subject to GST on payments received
  • are not allowed to claim GST credits for anything you purchase related to leasing the property.

Selling your holiday apartment or unit

If your apartment is not a new residential property and you sell it, then the sale is input taxed irrespective of the apartment being situated within commercial residential property. You may not be aware of these kinds of formalities, this is where you need to seek help from accountants and for this, you can also search for ‘accountants near me’ if you want to hire someone near your location.

Conclusion

The blog shares possible GST implications for residential and commercial property when you sell, buy, and lease it. For more information on GST implications, you can reach Reliable Melbourne Accountants.

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