VAT on Property
VAT in property transactions is notoriously complex, with a mix of exempt, zero-rated, and standard-rated supplies depending on the nature of the property and the parties involved. Getting VAT wrong in property transactions can result in irrecoverable input VAT and unexpected liabilities — making expert advice essential before entering into any significant property transaction.
What are the benefits?
Option to Tax
By opting to tax a commercial property, a landlord or vendor can charge VAT on rents and sale proceeds, enabling full recovery of input VAT on associated costs. We advise on whether the option to tax is appropriate for your property and manage the notification to HMRC.
New Build and Conversion
The construction of new residential dwellings and certain conversions qualify for zero-rating — meaning no VAT is charged to the buyer and VAT on construction costs can be reclaimed. We advise on meeting the conditions for zero-rating.
Capital Goods Scheme
For commercial properties where significant VAT has been recovered, the Capital Goods Scheme requires adjustments to VAT recovery over a ten-year period if the use of the property changes (e.g., from opted to non-opted). We advise on CGS obligations and manage the required adjustments.
TOGC Relief
The sale of a property investment business as a going concern can qualify for Transfer of Going Concern (TOGC) treatment, meaning no VAT is charged on the transaction. We advise on meeting the TOGC conditions to avoid unnecessary VAT costs.
How can Zenus Tax help?
We advise on the VAT liability of property transactions before they are entered into
We manage the option to tax process with HMRC
We advise on TOGC conditions for property transactions
We assist with VAT registration and returns for property businesses
Frequently Asked Questions
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