Are you interested in, or currently own a residential commercial property in Australia?
Commercial residential properties range from hotels, motels, caravan parks, camping grounds or any other establishments providing similar residential premises. As a general rule, commercial residential properties are subject to GST (goods and services tax). However, there are instances of GST reduction, like GST payable on supplies of commercial accommodation for 28 days or more. It can be hard navigating your way through the financial requirements of your business venture, like GST, but it doesn’t have to be that way.
Read on to find out more about commercial properties, GST requirements and how your Gold Coast Accountant, Crest Accountants can help you understand it all.
Commercial residential property characteristics
So, what makes a commercial residential property different from a commercial property and a residential property?
Let’s take a look:
- A Commercial objective,
- Multiple occupancies,
- General public accommodation offerings,
- The main purpose is providing accommodation,
- Management accepts reservations, allocates rooms, and performs guest services,
- The operating entity provides the accommodation rather than as an agent,
- Management provides guest services and facilities, or employs a third party to do so, and
- Occupants claim the status of ‘guests,’ and have their principle residence elsewhere.
Buying and selling commercial residential property
When buying a commercial residential property, you may be eligible to declare the GST, included in the purchase price, or claim a credit. This may also be possible for solicitor fees relating to the purchase of a property.
When selling your commercial residential property, you’re generally liable for GST on the sale price. This is because, you are in general, making a taxable sale.
What does this mean? It means you:
- Pay GST of one-eleventh of the sale price, and
- Can claim GST credits on your purchases related to the selling of the property, such as GST included in real estate agent fees.
Leasing commercial accommodation
Similar to selling, by leasing your commercial residential property, you’re making a taxable supply. This makes you liable for GST on one-eleventh of the lease payment made to you.
Good news! You can declare GST credits on purchases related to leasing your commercial residential property. For example, GST can be claimed in real estate agent fees.
How Crest Accountants can help
Your commercial residential property may be your sole income and business, or a separate business venture. Whatever your commercial residential property is to you, and whether you’re buying, selling, leasing or maintaining one – it’s vital to trust your business with the right people.
Crest Accountants are the Gold Coast Commercial Residential Property experts. We’ll work with you to achieve the best outcomes for your business, letting you focus on making yours stand-out and increase profitability.
Don’t worry, you don’t have to manage and maintain your commercial residential property alone. Understanding GST and commercial residential property can be complex, so make sure you choose reputable business advisors to guide you. With over 45 years in providing expert property accounting solutions, let us help you successfully manage your business assets.