Understanding GST on Property Sales in NSW

If you are buying and selling property in NSW, GST can be relevant. Whilst many property sales -especially residential- are GST free, certain transactions can be subject to GST.

One of these is new residential properties.  GST generally applies to the sale of new residential premises. A property is considered new if it hasn’t been sold as a residence before, has been substantially renovated, or replaces a demolished building. If you’re selling a new residential property, GST is likely payable, and you must be registered for GST. Since 1 July 2018, buyers must withhold the GST amount from the purchase price and pay it directly to the ATO—this is called GST withholding. It applies to most new residential properties and some vacant land sales.

The sale of commercial property is usually subject to GST unless it qualifies as a GST-free “going concern” (e.g. a leased commercial building with ongoing tenants). Buyers registered for GST may be able to claim input tax credits on the GST paid.

Special GST rules apply to farmland. If the land has been used for a farming business for five years immediately before the sale and the buyer intends to continue using it for primary production, the sale may be GST-free. However, if the land hasn’t been continuously used for farming, it may not qualify for GST-free treatment—even if it was used for agriculture in the past. In these cases, GST may apply, especially if the seller is registered or required to be registered for GST. Buyers and sellers must assess usage history carefully and include GST clauses in the contract where necessary.

Key Takeaways:

  • Sellers must assess GST obligations based on the type and use of the property.

  • Buyers should confirm whether GST applies and ensure contracts are accurate.

  • Professional advice is strongly recommended, especially for rural or mixed-use properties

Tina Cooper