Hello and HELP

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7 years 7 months ago #38750 by Odell
Hello and HELP was created by Odell
Hi Everyone, what an amazingly helpful place to discover! We are thinking of taking our very first foray into lifestyle living. We are looking to buy somewhere in Marlborough and have been looking at various possibilities. We need some advice re registering for GST or not. We will be stretching ourselves to buy the block we like the most and the agent suggested registering for GST to reduce the cost. But, having read some threads here we are now a bit wary - the block is only 10 acres and we don't want to end up burnt if we can't make enough. At what point does IRD force you to deregister if you are making a loss?

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7 years 7 months ago #498383 by LongRidge
Replied by LongRidge on topic Hello and HELP
We have not made a profit yet on our 25 hectares, in 23 years. We have not been told to deregister, and don't expect to. It would be nice if we could easily deregister, and also not pay income tax on the 14 hectares of pine trees that will need harvesting in the next 6 or 10 years.
With 10 acres, that might be too small to be considered an economical size so you might not be able to GST register. If the land has a house on it, the house and it's land does not have GST on it.

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7 years 7 months ago #498384 by kai
Replied by kai on topic Hello and HELP
You can register for GST on land of any size, we were registered on 10 acres, however I would strongly advise against it. If you say buy land worth 500K and claim the GST back from it, when it comes to sell at some point in the future and it is worth 700K then there will be an extra 200K worth of GST to pay back also if the government raises GST again, even you have to pay it back at a higher rate than you claimed it.

You can register a company separately from the property and use that to claim GST on the day to day running costs without registering the property itself.

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7 years 7 months ago #498391 by max2
Replied by max2 on topic Hello and HELP
Get independent financial advice. We don't know your circumstances to be able to make any recommendations as to what you should or shouldn't do.

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7 years 7 months ago #498428 by Odell
Replied by Odell on topic Hello and HELP
Hi everyone,
Thanks so much for ideas, advice thoughts. I imagine it's the same for lots of people - the land you want is just a little bit out. Of reach financially! We'll definitely talk to an accountant and get professional advice as well.

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7 years 7 months ago #498461 by max2
Replied by max2 on topic Hello and HELP

Odell;503991 wrote: Hi everyone,
Thanks so much for ideas, advice thoughts. I imagine it's the same for lots of people - the land you want is just a little bit out. Of reach financially! We'll definitely talk to an accountant and get professional advice as well.


Sadly the expenses don't just stop with the purchase price.... you need to be aware (if not already) its just the start of a long road.

In the case of our adjoining neighbours who are in the process of selling up, their property has substantial amount of external fencing that needs replacing.

Neighbours have been grumbling for some time and the owner has failed to act regardless of legal fencing notices being served.

I believe the incoming neighbour has already fielded a number of calls from existing landowners warning her of their expectations of having the fencing replaced.

To use these same people again as another example, the property also needs extensive fertilising and yard re-building. The house is full of holes from when it was re-wired initially, and I believe its freezing cold as they never replaced the missing front door..... so for our incoming new neighbour, she is probably looking at another $150K* in expenses just to get the property up to reasonable basics. [:0]

* this figure relates to the property which is considerably larger in size than the one you are looking at. However I am using it as an example that simply purchasing land isn't the only outgoing one can expect.

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7 years 7 months ago #498559 by LongRidge
Replied by LongRidge on topic Hello and HELP
The times that you will get "burnt" by registering your land, and house if it is an integral part of the business, are
1. if the GST rate increases. We got a 10% reduction in land cost, or a 10% refund, when we bought. We are now going to have to pay 15% of the business part of the land when we sell, or whatever the GST rate is at the time. With some stuff you only have to pay the same rate when the item is sold that you claimed when you bought. I plan to try this when we sell our land.
2. If the land increases in value hugely more than the cost of living. If the cost of living is relative when you buy and sell, then your 15% refund will be as relatively valuable (but not as actually valuable, if you can visualise ....) to you now as the 15% cost when you sell.

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