Some investors have purchased apartments with a guaranteed rental income by virtue of it being leased to a management company. As a result, this makes the leased apartment a going concern i.e. the apartment is considered an active business with an active lease to a management company. And because it is purchased as a going concern, GST is charged at zero percent( 0%) i.e. it is zero-rated.
However, changing the use of the apartment or selling it without renewing the original management agreement may result in GST having to be paid on the sale, together with other taxes.
If you are considering selling a leased apartment similar to the one outlined above or changing its use, it is important that you check for any GST implications before proceeding.
To find out more, please contact us.
All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers, for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.