GST and Property Development – Change in use and the 5 year rule

I often get asked…

“What if we claimed all the input tax credits when we built the residential premises but now we have rented it out for 5 years. Does this mean I get all the input tax credits from building it and then do not remit GST on the sale under the five year rule?”

The paper below considers adjustments to the input tax credit claims by property developers who either rent out the properties they develop while waiting for a sale (always intend to sell the property but while they wait for the sale get some rental income) or just decide that they no longer want to (or can) sell the property and make the decision to rent it out going forward and not pursue a sale. For completeness, the paper also considers the 5 year rent rule that can exclude a property from being new residential property.


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