Author Topic: Impact of GST on propertypost Apr 2015  (Read 6118 times)

Offline toypoodle

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Impact of GST on propertypost Apr 2015
« on: May 28, 2015, 05:45:51 PM »
I hv been getting confusing info from unreliable sources on the implication of GST on property transaction. Is it true that:
1. The S&P price of subsales property is free from GST?
2. The S&P price of developer property is subjected to Standard Rated GST?
3. The total amount of bank loan is free from GST?
4. The amount of interest payable is subjected to Standard Rated GST?

I would be very grateful if any well informed person could kindly advise, thank you.

Offline chrisyen

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Re: Impact of GST on propertypost Apr 2015
« Reply #1 on: June 01, 2015, 09:04:08 AM »
Is it true that:
1. The S&P price of subsales property is free from GST?
a: depend on who is seller and what type of property you sell! if seller is a GST registered entity and property you sell is non residential then its subject to GST.
having said that, for those to buy and sell property often and that become your business... soon IRB will after you.

   
2. The S&P price of developer property is subjected to Standard Rated GST?
a: non residential yes. residential is exempted.

3. The total amount of bank loan is free from GST?
a: yes

4. The amount of interest payable is subjected to Standard Rated GST?
a: no. Bank interest is not subject to GST, but bear in mind bank other services' charges is subject to GST

above is my uunderstanding
pls correct me if any tax expert thin otherwise


Offline toypoodle

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Re: Impact of GST on propertypost Apr 2015
« Reply #2 on: June 01, 2015, 10:35:55 AM »
Thank you so much, Chris.

To make sure that I fully understand your points:
if we buy Non-residential subsale from Non-GST regd vendor, ------> Don't need to pay GST. But, need to pay GST, if vendor is GST regd.
And, bank loan interest on Non-residential property is also Not subjected to GST.

Offline toypoodle

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Re: Impact of GST on propertypost Apr 2015
« Reply #3 on: June 01, 2015, 10:52:38 AM »
One more question pls, the developer advised me that since I am Not GST regd, it will be advisable for me to set up a holding SB, to purchase the Non-residential property under the holding SB name. The reason being, we can then pocket the rental associated GST collection, upto the total amount that we had paid when we purchsed it from the developer. After we have collected the sum total of the GST that we'd paid, then the rest will be collect on LHDN behalf.

Is that true?

If that is true, will it alter my previously Non-GST regd company & personal tax status?

Offline chrisyen

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Re: Impact of GST on propertypost Apr 2015
« Reply #4 on: June 02, 2015, 09:55:43 AM »
Thank you so much, Chris.

To make sure that I fully understand your points:
if we buy Non-residential subsale from Non-GST regd vendor, ------> Don't need to pay GST. But, need to pay GST, if vendor is GST regd.
And, bank loan interest on Non-residential property is also Not subjected to GST.

yes. all kind of bank loan interest also not subject to GST.

Offline chrisyen

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Re: Impact of GST on propertypost Apr 2015
« Reply #5 on: June 02, 2015, 10:07:10 AM »
One more question pls, the developer advised me that since I am Not GST regd, it will be advisable for me to set up a holding SB, to purchase the Non-residential property under the holding SB name. The reason being, we can then pocket the rental associated GST collection, upto the total amount that we had paid when we purchsed it from the developer. After we have collected the sum total of the GST that we'd paid, then the rest will be collect on LHDN behalf.

Is that true?

If that is true, will it alter my previously Non-GST regd company & personal tax status?

what do you mean by setting up a holding SB ?

set up another company and register for GST ?

when you resell or collect rental for this property, you can claim the GST input tax to recover the 6% u paid during the purchase?

if above ir your question, then i am afraid i cant answer you till you do all your calculation
1. how much cost incur for setting up a company
2. how much cost to maintain that company - beside the normal cost of accounting and auditing, now u need to spend extra on GST software and cost of submission & claim dealing with LHDN...
3. how many years you want to maintain that company?

and another key question is....

if im am buyer or tenant who look for the property you put up for sale or rent?

why shd i pay you 6% extra if i can find another seller or owner that is not GST register!!!

Offline toypoodle

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Re: Impact of GST on propertypost Apr 2015
« Reply #6 on: June 02, 2015, 06:05:10 PM »
Very good points indeed, Chris. Thank you so much for kindly enlighten me. Must really invite you for dinner some time.

The GST cost is abt 250k-300k.

1. Account for the outgoing GST, the cost of setting up a SB is considerably minimal.
2. Initial setup cost, including software <10k, + ~2k annual accounting & audit fees.
3. Assuming annual rental collection ~220k-250k, ------> GST ~13.2k-15k ........... It will take donkey years to recover it back!

Thanks again for your invaluable advise. :thumbsup:

Offline chrisyen

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Re: Impact of GST on propertypost Apr 2015
« Reply #7 on: June 04, 2015, 07:56:08 AM »
Very good points indeed, Chris. Thank you so much for kindly enlighten me. Must really invite you for dinner some time.

The GST cost is abt 250k-300k.

1. Account for the outgoing GST, the cost of setting up a SB is considerably minimal.
2. Initial setup cost, including software <10k, + ~2k annual accounting & audit fees.
3. Assuming annual rental collection ~220k-250k, ------> GST ~13.2k-15k ........... It will take donkey years to recover it back!

Thanks again for your invaluable advise. :thumbsup:

i'm kopitiam talk kok master

u did your calculation... choice on you

do consider from your future buyer / tenant perspective... how limited is the unit? why shd they pay you GST?

Offline toypoodle

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Re: Impact of GST on propertypost Apr 2015
« Reply #8 on: June 05, 2015, 08:00:18 AM »
Will give our MWF's Warren Buffet a dinner some time.