Hello Rashmi
Sorry if I caused any confusion. There is certainly no requirement to rent the property from settlement in order to be in a position to claim back the GST input tax credits in relation to the purchase of the property.
The situation that needs to be avoided is one where the SMSF, which is currently registered for GST, claims back the input tax credits upon settlement, and then cancels its registration for the GST, so that it does not have to charge GST to the tenant on rent.
Where the SMSF cancels its GST registration in the way described above, it will have what is referred to to as an adjustment event, where input tax credits previously refunded by the ATO in relation to settlement, may have to be returned to the ATO.
Where a taxpayer that is registered for the GST, makes some alterations to real estate after settlement, and before renting it out, this of itself should not cause any adjustments to GST previously claimed to be triggered.
Best regards
The Auditors Institute