Investing from Australia

Question from Prue updated on 1st February 2012:

I'm a Kiwi resident in Australia and considering investing in the New Zealand residential property, possibly in Northland. Can you please tell me whether I would be charged GST on such an investment? If so, is there any way that I could defray the GST component of the purchase price? I would be investing in the property, not using it personally and looking in the region of $450,000 upwards.

Our expert Mark Withers responded:

It depends on whether the vendor is registered for GST and whether you, the purchaser will conduct a taxable activity from the property. Remembering that residential rental is exempt from GST. So generally it would need to be a commercial property to be registerable for GST. If the vendor is a property developer they may well look to charge GST on the sale, make sure you negotiate on an "inclusive of GST" basis rater than a plus GST basis. If they are registered and you are registering before settlement date for a taxable activity and the property will not be your residence the sale must be zero rated under the new compulsary zero rating rules. Regards Mark

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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