GST Perspectives and Real Property

The real property industry in Australia is one that intersects the boundaries of many aspects of taxation.The Goods and Services Tax (GST), is a broad based tax of 10% which applies to goods and services supplied and expended, including real property transactions such as commercial and residential property. The complexity of GST for real property is highlighted with the varying treatment of commercial and residential sales and rental. The sale of a commercial property is classified as either a taxable supply or a GST free supply; whilst the commercial rent is considered a taxable supply only. However, residential property sales and residential rent is generally considered an input taxed supply unless the property is sold as new residential where the application would be a taxable supply. Vacant land can fall into all three classifications of taxable supply, input taxed supply and GST-free supply. Farmland can generally be considered a GST-free supply but there are some exemptions which might require the treatment to be a taxable supply. Therefore, this research paper examines a number of interrelated areas concerning GST legislation for real property and critiques the application of GST to stakeholders in commercial and residential buildings. It is argued that GST can influence the price of real property and questions the validity of sales data available to valuers for the purpose of preparing valuation reports