VAT and Property Transactions
The VAT treatment of property, construction, and land transactions can be very complicated and any mistakes made are often not easy to correct afterwards. If you are planning on doing anything that is unusual it would pay to talk to the VAT advisers at R D Owen and Co. Generally property transactions are VAT exempt although there are exceptions to this rule.
If you rent or sell existing residential property then for VAT purposes you will be making an exempt supply. The VAT you incur on services and goods relating to the property is not likely to be recoverable (see VAT and partially exempt organisations). The result is that if your business consists entirely of renting residential accommodation you will not be required to register for VAT.
Normally, if you sell or rent a commercial property which is not new the VAT liability is exempt. However, there are cases when VAT will be charged. For example, an owner/landlord can decide to waive the VAT exemption in order to recover input VAT on their costs. This is commonly known as "opting to tax".
These rules may seem fairly simple, but as anyone regularly involved in property transactions will know, there are many ways in they can become highly complex. It is therefore always prudent to ask an expert to review the VAT position of anything more than the most basic property transaction.
Contact us for expert advice about VAT and any property transactions.