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Commercial Residential Properties and GST

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Generally, commercial residential properties are subject to GST. However, there are instances when the GST is reduced such as the GST payable on supplies of commercial accommodation for 28 days or more.

Let’s further discuss the connection between commercial residential premises and GST.

What are commercial residential properties?

Here are some examples of commercial residential properties:

  • A hotel, motel, hostel, boarding house, inn
  • A camping ground or a caravan park
  • Anything comparable to the establishments above

Characteristics of commercial residential properties

The general characteristics of a commercial residential premise are:

  • commercial intention – the premises are operated in a business-like manner or on a commercial basis
  • multiple occupancy – the premises have the capability to provide accommodation to a number of residents or unrelated guests at the same time in separate rooms or in a dormitory
  • the premises offer accommodation to the general public or a sector of the general public
  • providing accommodation is the main function of the premises
  • the property has central management to accept reservations, allocate rooms, and perform a range of guest services
  • the entity operating the facilities provides accommodation in its own right rather than as an agent
  • management provides or arranges for services and facilities for guests and residents, or arranges for third parties to provide for them
  • the occupants usually have the status of guests who have their principal place of residence (home) elsewhere

Selling commercial residential properties

If you sell commercial residential properties, you are in general making a taxable sale.

You can claim GST credits on purchases you make that relate to selling your property. For instance, you can claim the GST included in a real estate agent’s fees or solicitor costs.

Acquiring commercial residential properties

If you buy a commercial residential property, you may be entitled to declare the GST included in the purchase price of the property, unless the seller used the margin scheme to calculate the GST included in the price.

Leasing commercial residential properties

If you rent your commercial residential property to someone who uses it to run their own accommodation business, you are making a taxable supply and you are liable for GST of one-eleventh of the lease payment made to you.

You can declare GST credits on purchases you make that relate to leasing your commercial residential property. For example, you can claim the GST included in real estate agent fees.

Commercial residential properties and GST can be complex. Should you need assistance or have any questions, contact a Chan & Naylor tax accountant here and we’ll be more than happy to help.


Aside from property and GST assistance, have a look at our other accounting and advisory services that we do to help you achieve greater success.

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Chan & Naylor Group has nationwide offices in North Sydney, South West Sydney, Sydney, Pymble and Parramatta in New South Wales, Melbourne, Moonee Ponds and Hawthorn in Victoria, Brisbane and Capalaba in Queensland, and East Perth in Western Australia that can assist you with your GST compliance as well as any other business or personal tax enquiry that you may have. Contact us today.

Source: ATO

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