Salary packaging residential rental property expenses to beat the GST
The strong performance of the Australian property market over the last few decades continues to strengthen our love affair with owning real estate. The property boom, together with the tax benefits of negative gearing, has enabled many employees to establish a rental property portfolio.
Residential rental properties are, by far, the more popular choice for the average investor, as compared to commercial rental properties. Whilst they are mostly treated in the same manner from an income tax perspective, there are significant differences when it comes to the GST implications of investing in residential rental properties as opposed to commercial.
From a GST perspective, the key difference between the two is that the supply of residential premises to derive rental income is an input taxed supply, whereas the supply of commercial premises for rental income is generally a taxable supply. Refer to S.40-35 of the A New Tax System (Goods and Services Tax) Act 1999 (‘GST Act’).
For further clarification or assistance, reach out to Tax Ideas Accountants & Advisers at +61 2 83181545. You can also schedule an appointment through our convenient live calendar.