VAT and Property Transactions
The VAT treatment of construction, property and land transactions can be complex and any errors made can be difficult to rectify later. If you plan to do anything out of the ordinary it makes sense to discuss this with the VAT advisers at Dufton Kellner in Wirral. In general, property transactions are exempt from VAT - however, there are exceptions.
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.
If you rent or sell existing commercial property then by default the liability will be VAT exempt. However, in some instances VAT will be charged, such as when the VAT option to tax is invoked (i.e. where the owner/landlord has chosen to charge VAT). This is done by waiving the VAT exemption, also known as "opting to tax" and it enables the owner or landlord to recover input VAT on their costs.
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.
For more help about VAT and any property transactions you are considering, please contact us for specialist advice.