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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 21159
Experience:  37 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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Hello, It would be greatly appreciated if you could help us

Customer Question

It would be greatly appreciated if you could help us out.
If you have an Unregistered for GST, Title block of grazing land of 5 Ha with no house, 2 Haysheds and you would like to sell it to your son.
a, Would you market value this land by adding GST? He will be buying it in an Unregistered Trust.
b, Also if no Land Agents are involved and it is a fair family sale, would you deduct Land Agent's fees normally from the Market Value?

Kind Regards,
Submitted: 2 years ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 2 years ago.

christhelawyer : HiWelcome to JustAnswer. My first response will follow shortly. Please feel free to follow up if anything is not clear
christhelawyer : If you are not registered for GST then the value is not affected by including GST. So you sell at what ever the correct market value. However there are no rules about the price and you can sell to him at any price you want.
christhelawyer : the land agents fee would be a cost to the vendor, and also would have no effect on the market value.
christhelawyer : The correct market value may be important if you like
christhelawyer : to keep this at arms length, or you may be looking at the rest home subsidy.
christhelawyer : otherwise the price is what you and your son agree
JACUSTOMER-ulbh7nfb- :

Thankyou for your reply Chris, this has nothing to do with Resthome Subsidy as we are 58 years of age.

JACUSTOMER-ulbh7nfb- :

The question is you can only have one market value, so is that market value allowed to have GST in it or should it be subtracted. One Valuer believes it should be GST inclusive and our Lawyer thinks so too. Our Accountant and two Valuers say 'that only land under 2 Hecs and especially with houses on them have a market value GST Incl.

JACUSTOMER-ulbh7nfb- :

They say land larger than 2 Hecs should not in this case have any talk of GST on.Which mean the 3 hecs left shouldn't have GST in the market Value or would the whole 5 Hec have no GST? If the valuation at present is $410,000.00 GST Incl. does our son pay this price or do we deduct GST of 15% off this figure.

JACUSTOMER-ulbh7nfb- :

Thanking you.

christhelawyer : Is your son registered for GST?
christhelawyer : That is the main factor
christhelawyer : If he is not then GST is not a factor in the value.
christhelawyer : The status of the vendor and purchaser and whether they bought the land and sold the land with or without GST is also relevant.
christhelawyer : I will check in later when these issues have been clarified and I can then be more definite.
JACUSTOMER-ulbh7nfb- :

Thanks Chris, I will have to wait until my husband comes back in to ask him some questions. I will be intouch thankyou

JACUSTOMER-ulbh7nfb- :

Hi Chris,

JACUSTOMER-ulbh7nfb- :

I have just talked to my husband and he said, the purchaser is Unregistered for GST and the vendor (which is our Trust)is Unregistered, so why should a Valuer value be able to value the property GST Incl. when he was advised the Vendor and Purchaser were both Unregistered for GST?If our son decided in years to come to grow a crop such as strawberries or kiwifruit and decided to Register for GST, could he then claim back the GSTwhen he Registers from the orginal price of the land? Thankyou very much.

christhelawyer : You must claim the GST at the time of purchase not later. So if neither of you are registered then this value should not include GST in my view. It should be the true market value.
JACUSTOMER-ulbh7nfb- :

Thankyou Chris, but how do you get a true market value if the Valuers are told of all sales, generally in a GST incl. price and which they do their valuing from?So how do you get a true market value when we are not going on the open market and trying to do the fairest thing for our family? What is your interpretation when one Valuer values GST inclusive and the other Valuer Exclusive and we need to know the market value and they are both at $410,000, one $410k Incl and one $410k exclusive. What it the market value? Why wouldn't one be approximately $350k GST excl. and the other $410k incl. we find this very confusing. and only want to do the right thing. thanking you.

christhelawyer : In this context where vendor and purchaser are not GST registered, the value must be without taking GST into the figures. A value is in the end, what a willing seller and willing purchaser will pay. In a rural area, there will be well established figure per hectare for land depending on the condition and quality. If this land was sold on the market, and you were not registered for GST would you pay the higher or lower figure? The answer to that, is what the market value will be.
JACUSTOMER-ulbh7nfb- :

Thankyou Chris, you have been most helpful, have a nice weekend. Bye Heather

christhelawyer : great, I hope this has been useful
JACUSTOMER-ulbh7nfb- :

yes thanks very useful.

christhelawyer :

Ok, glad to help

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