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  • Dino Montepara

Paying GST when purchasing a property

When purchasing a property, the parties to the sale and purchase agreement elect whether the purchase price includes GST or not.

A vendor such as a developer may be GST registered. Accordingly, the purchaser will liable for GST on the purchase price (unless the price is agreed to be GST inclusive).

Zero rating can be a possibility where:

  • The vendor is GST registered at settlement;

  • The purchaser is GST registered at settlement;

  • The purchaser (or any associated person) will not be using the property as a principal place of residence; and

  • The purchaser will use the property to make taxable supplies.

Importantly, residential rental is not a taxable supply. Therefore, even a GST registered purchaser may not claim the transaction to be a zero-rated transaction.

Given the value of properties in New Zealand, GST issues can have a big financial impact on a property transaction. We recommend that when buying or selling a property that you obtain advice on any tax issues before signing the agreement. For more information on this or any other legal issues contact Kemp Barristers & Solicitors Ltd. at or 09 412-6000.


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