Is commercial property VAT exempt?

As a general rule, the sale or lease of a commercial property is exempt from VAT, which means neither a purchaser nor a tenant would have to pay VAT. That exemption extends to the exchange of interests in, rights over or licences to occupy commercial properties.

How do I avoid paying VAT on commercial property?

If you are buying an opted commercial property, you can avoid paying VAT if you can obtain TOGC status for it by having a tenant in place and being registered for VAT and opting to tax it at the time of the sale.

What property transactions are exempt from VAT?

The following supplies will be exempt: all leases, assignments, surrenders, reverse surrenders or licences to occupy any interest in land or buildings; sales of freehold commercial property or civil engineering works more than three years old or sales, leases or licences of all residential or charitable property.

Is there VAT on commercial property rent?

The sale or lease of a commercial property is generally exempt from VAT. If so, the purchaser or tenant does not have to pay VAT. That may be very good overall, however, when a vendor or landlord makes an exempt supply of a property, they are unable to recover VAT incurred on related costs. These can be significant.

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What is commercial property VAT?

Commercial property owners have the option to charge VAT at 20% (currently the standard rate). When a landlord or vendor opts to tax property, they need to usually charge VAT on all supplies which relate to the property, therefore charging all rentals or sales.

Do I have to pay VAT when I sell my house?

No, the sale of property will be subject to either VAT or Transfer Duty. VAT takes preference over Transfer Duty. If the seller is a registered VAT vendor and the property forms part of the seller’s enterprise, then VAT is payable.

Can you opt to tax residential property?

The option to tax allows a business to choose to charge VAT on the sale or rental of commercial property i.e. to make a taxable supply out of what otherwise would be an exempt supply. Any option to tax does not affect a residential building or residential part of a building.

Is VAT payable on new build commercial buildings?

The sale of a new commercial building is standard-rated. A building is classified as new for a period of three years following completion. Sales of non-new commercial buildings are VAT exempt unless the vendor has “opted to tax” the building. The letting of dwellings is VAT exempt.

Can I reclaim VAT on commercial property refurbishment?

You are entitled to recover VAT on costs, including property purchase, refurbishment, and legal fees, etc. … The only exceptions are the sale of a part-completed property, and a property that is less than three years old, both of which are standard rated. Opting to Tax. However, a vendor or landlord can “Opt to Tax”.

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Can I claim VAT back on commercial rent?

Whether you are charged VAT on rental payments depends on the particular property. … You can reclaim any VAT you pay, in the same way as you do for other business purchases. However, if your business is not VAT-registered, or if you make VAT-exempt supplies, any VAT charged on rental payments will increase your costs.

Do you pay VAT on a rent deposit?

VAT is not actually payable when the money is put on deposit, since the landlord is making no supply at that date. … No VAT invoice is required when a rent deposit deed is entered into if a sum equivalent to VAT is paid.

Are commercial new builds zero rated VAT?

Builders working on new buildings should be zero-rated meaning you won’t pay any VAT on their services. The building being converted must be a non-residential building. … You can claim a refund for builders’ work on a conversion of non-residential building into a home.

Do property companies pay VAT?

Generally, residential landlords do not need to worry about VAT. However, as we will discover later, landlords and property developers may be able to claim VAT they paid for building works carried out by them.