SearchTax liabilities for LTC property
Barry asks:
(updated on Thursday, December 08th 2016)
I've owned a property for around nine years now and it is in a LTC/LAQC setup. I'm looking at selling the property and wondered what sort of GST/TAX liabilities there would be.
We bought the house nine years ago for $730,000. We believe we can sell it for around $1.3m or there abouts in the current market and there is only around $280,000 left on the mortgage.
My understanding is that when selling the property it is GST inclusive. (I'm assuming we're selling it to a new home owner that is not GST registered).
Do we need to pay the GST portion back to the IRD? Or pay any capital gains on the profit (the latter I don't believe)?
Any advice would be greatly appreciated.
Our Experts Answer:
I will have to make some assumptions to answer this.
Firstly, I assume you have a LTC as LAQC's are gone but some did default to QC only. Regardless, under either structure the distribution of a capital gain by the company remains tax exempt to the shareholder. Residential rental is an exempt activity from GST. I assume therefore that your company is unregistered. In this scenario no GST is payable.
If your company is GST registered this would signal you may have acquired with some development or trading intention. If this is the case, seek professional help on all fronts. Because you will have owned the property during the time buildings could be depreciated you will likely have a tax liability on the recovery of depreciation. Check how much has been accumulated and make a plan to deal with this.
Most Read
| Unity First Home Buyer special | 4.09 |
| SBS FirstHome Combo | 4.19 |
| ICBC | 4.49 |
| Co-operative Bank - First Home Special | 4.55 |
| Kainga Ora | 4.59 |
| BNZ - Std | 4.65 |
| Co-operative Bank - Owner Occ | 4.65 |
| ASB Bank | 4.65 |
| AIA - Go Home Loans | 4.65 |
| TSB Special | 4.69 |
| ANZ Special | 4.69 |
| ICBC | 4.89 |
| China Construction Bank | 4.95 |
| Kainga Ora | 4.95 |
| Nelson Building Society | 5.09 |
| BNZ - Std | 5.19 |
| SBS Bank Special | 5.19 |
| Westpac Special | 5.19 |
| ASB Bank | 5.25 |
| AIA - Go Home Loans | 5.25 |
| TSB Special | 5.25 |
| Kiwibank Special | 5.29 |
| ICBC | 5.65 |
| Kainga Ora | 5.69 |
| Westpac Special | 5.79 |
| BNZ - Std | 5.79 |
| SBS Bank Special | 5.79 |
| Co-operative Bank - Owner Occ | 5.89 |
| ASB Bank | 5.89 |
| AIA - Go Home Loans | 5.89 |
| Kiwibank Special | 5.99 |
| TSB Special | 5.99 |
| China Construction Bank | 5.99 |
| SBS FirstHome Combo | 3.29 |
| AIA - Back My Build | 3.34 |
| SBS Construction lending for FHB | 3.74 |
| CFML 321 Loans | 3.95 |
| Co-operative Bank - Owner Occ | 4.99 |
| Co-operative Bank - Standard | 4.99 |
| Heartland Bank - Online | 5.30 |
| ICBC | 5.39 |
| Kiwibank - Offset | 5.75 |
| Kiwibank Special | 5.75 |
| Kiwibank | 5.75 |
