Q. I am considering buying a commercial property as an investment. The vendor is registered for GST and the property has an existing commercial tenant. Will I have to pay GST on the purchase? Will I have to register for GST? Would this GST treatment be different if I purchased a residential rental property? Is there a capital gains tax if I sell the property?
Monday, March 28th 2005, 7:36AM
by The Landlord
A. As the property is a commercial property and the vendor is registered for GST the sale of the property to you will be a taxable supply. In that case, GST will be either nothing or charged at 12.5 per cent.
GST will be charged at 0 per cent if the commercial property is supplied as a going concern (and the parties agree in writing that it is the supply of a going concern).
It will be a going concern if the commercial property is to be sold subject to the existing tenant. You will also need to register for GST to get the benefit of this zero-rating. You could not claim a GST deduction on the purchase price, if the sale is zero-rated.
