[nippa&pippa]

Can anyone explain how it is work if there is 'GST on land (if any)'

We know it is somewhere 12.5% against cost of land? (Is i am right?) but what does mean with "if any" :confused: ????

Thanks

[Pip]

Hi Sophia,

I'll do my best, but I'm sure one of the guru's will come along sooner or later and give you a proper answer!

When we were looking at some properties with ten acres, the estate agent told us it went something like this (assuming she was telling us the truth and I understood what she was saying!):

A price is agreed for the sale of house and land e.g $500,000. The house is then valued and whatever sum remains is deemed to be the value of the land. So if the house was valued at $495,000, then the value of the land would be deemed to be $5000 and GST would only be payable on that. If the house was valued at $500,000, then the land is deemed to have no value and GST is not payable..

I think my take away was that if price includes GST, thats a good thing, and if not, it seems as though land sold with house is not valued at very much and GST seems to be quite minimal. Obviously different if you are buying a section and planning on building it...

Now did that help or hinder ?! :laugh

[Trigirl]

GST is only payable if the seller is GST registered (ie you are buying frmo a company). regardless of whether GST is payable or not you pay the same price and it is up to the seller to settle their GST responsibilites out of the amount you pay - hence you agree a price that "includes GST if any"

[nippa&pippa]

hmmm, didn't fit in with house story....
A house with 12 acres of land, which previous owner had business running on these land till 18months ago new owner took over and didn't do well (something do with relationship!:o ) so estate agent mentioned about the GST land valved is something to do with inland revenue as depend on how much money they made in last 1 year which mean poss. if any of GST, which my OH and I am confused on this.......maybe i will be waiting for 'expert' to inform us!!!

[nippa&pippa]

GST is only payable if the seller is GST registered (ie you are buying frmo a company). regardless of whether GST is payable or not you pay the same price and it is up to the seller to settle their GST responsibilites out of the amount you pay - hence you agree a price that "includes GST if any"

Thanks for info. Any idea how much GST is? 12.5%?

[Moorf]

So are they selling their property and land to pay off their business - i.e is it in business names? That could be why they are playing around with GST.

[eternalkiwi]

If the existing owner is GST registered they would need to pay GST to IRD for the Land Sale price.
If they deregister (due to the poor trading of the business) before selling the property, they will settle any GST obligations with IRD before they sell the property.

GST would be 12.5% of the agreed land value (as in the Sale & Purchase agreement).

Also check to ensure the contract states the price "includes" GST if any, some agreements state the sale price "excludes" GST if any which can mean claims for payment of GST at a later date.

If the seller is selling the farm as a "Going Concern" (basically a viable business of any size) there is no GST payable, which could be what the land agent was talking about.

Shawn

[nippa&pippa]

My OH and I like to say thank you very much for informations as it has help us so much that we now understood. Just doing more research tonight before decide on offer for this house.