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Property Development & VAT

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  • 04-09-2003 12:37am
    #1
    MrHappyChap
    Closed Accounts Posts: 20 ✭


    If someone buys a residential property (not their principal residence) and develops the property, installing new windows, adding an extension etc - the intention being to later sell at a profit; then I believe this would be classed as a self-employed venture and any profit made would be liable to income tax.

    If someone does this, would the person be required to become VAT registered? I just wondered as the VAT threshold I think is around €50,000 or so. And the price a house would be sold for would obviously be higher than this.


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    #2
    uzami
    Closed Accounts Posts: 507 ✭✭✭uzami


    now i think..... that you won't be able to claim vat back on the sale of the house because you will be unable to charge anyone vat for the services you provided during the refurbishment (you can't sell the house for cost plus expenses plus vat)....though you can offset expenses incured against tax liability on income (rental) earned if rented out.

    in other words.....if you were s/e and charged a client vat for undertaking (subcontracting) a refurbishment on their behalf, you could then claim vat back on the vat you were charged whilst doing the job


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    #3
    Victor
    Registered Users Posts: 78,370 ✭✭✭✭Victor


    I fthe porperty is being substantially "improved", I thnik you end up charging VAT, not stamp duty. i would depend on how much it is improved. Building a new house is definitely an improvement, but I'm not sure about and extension.

    They should be a detailed (30+ pages) document on just this on www.revenue.ie.

    By being VAT registered, you could reclaim the VAT on any materials used (many construction materials are at the lower 13.5% rate, although furnishings and fittings are at 21%). If this is a one time thing, you would be charged CGT (20%), not incoem tax (40%).

    You should get expert advice on this.


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