Beach Houses and GST changes
Beware! Do you rent out your Beach House short term? AND is it owned by an entity that files GST returns?
With the changing legislation around the definition of commercial rental properties, we have a concern with beach houses. A commercial rental property now includes residential properties if they are rented out for short term rent e.g. a beach house.
For example, you may have a Trust which owns a farm and therefore is GST registered. And this Trust also owns your beach house. If you rent out your beach house short term, you must now return GST to the IRD on the income and expenses for the house. This includes many people who advertise their property on the internet, perhaps the “Book-a-Bach” site or similar. And this is also very easy for the IRD to trace.
There may also be GST implications on the sale of your property.
If you have no other business in the entity which owns it, there are no implications for you with the new rule. You will not need to be GST registered unless your turnover exceeds $60,000 per annum which would be far in excess of the turnover of your beach property. Also if you beach house is not rented out, you have no worries.
A solution could be to transfer the property to another entity which is not GST registered. If this might apply to you, we suggest you come and talk to us.
http://www.cooperaitken.co.nz/Services/Taxation/GST
