by The Landlord
The Inland Revenue Department (IRD) says many investors don’t pay GST when they buy an apartment, but may be faced with a large GST bill when they want to sell if there have been any changes, such as to how the apartment is used, or if the original management agreement has expired.
“In many cases, the apartment purchase included a lease to a management company, often with a guaranteed rental arrangement,” IRD assurance manager Richard Philp says.
If the apartment is bought as a going concern, no GST is payable, provided certain conditions are met, such as both parties being GST-registered. IRD defines such a transaction as “zero-rated” for GST.
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