Sam Saad

Look, in addition to adding those four things that you need to make sure to apply for a sale of going concern, the most important thing for a commercial property is that the property is being sold with a tenant.

If there's no tenant in place and there's no lease in place, the sale of going concern GST exemption won't apply.

This means that you'll have to pay GST on top of the purchase price.

And if those items are not ticked and it's usually ticked off in a due diligence process that's done before you buy a property, if it's not ticked off, you could be paying a 10% amount on top.

So if you're buying a $5 million property, that's $500,000 you have to come up with that you may not have expected.

Craig, look, there's a number of circumstances where it can't apply and some people can get caught out on these very easily if they don't make sure that all their due diligence and lease checks are ticked off.

Number one, if there's no lease on the property and it's being sold vacant, the GST exemption unfortunately doesn't apply and you'll have to pay GST on top of the purchase price.

Number two, sometimes people offer, some vendors offer a rental guarantee, but that's not sufficient for a GST exemption to apply.

So even though they're guaranteeing the rent to be paid for a certain period after the tenancy commences, they won't be able to claim that GST exemption.

We'll still have to come up with that amount up front.

Another circumstance is if a purchaser is buying a commercial property subject to a lease,

and the vendor terminates the lease before settlement, this could lead to GST being payable on settlement.

Even though you entered into a contract making sure that you had a lease in place, it's important that there are special conditions in the contract ensuring that the vendor has an obligation to make sure that the lease remains in place all the way through and up until after settlement.

Another situation is if it's intended that a going concern is a leasing enterprise, the lessor and the lessee are the same entity, that won't allow you to do a GST exemption.

So if the vendor who's selling is also gonna be the tenant, that won't work.

And finally, this is where a lot of people get caught out.

If part of the premises has got a lease and the other part doesn't, then the property can be apportioned to only be part GST free.

If there's part of it that's not GST free, then you have to pay an amount of GST on top of the portion that doesn't have a lease over it.

They're all the main areas that you can get caught out when buying a commercial property.

Yeah, absolutely.