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Implications of "joint option to tax" sale of commercial building

  • 20-05-2020 8:11pm
    #1
    Some_randomer
    Registered Users, Registered Users 2 Posts: 392 ✭✭


    There’s a commercial building for sale on a main street in a town down the country that requires substantial refurbishment. It has retail units on the ground floor and some living space overhead. The sale is listed as a “joint option to tax” which means the purchaser will have to pay VAT.

    What I’m wondering is if I buy the property for a business that I’ll be setting up in the next few months (i.e. company isn’t set up or registered yet):

    - can the vendor force the sale as joint option to tax or is it optional?
    - can I re-claim the VAT when the company is set up?
    - could / should I sell the building to the company when the company is up and running?
    - are there any other implications I'd need to be aware of?

    Thanks in advance.
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  • #2
    davindub
    Registered Users, Registered Users 2 Posts: 1,447 ✭✭✭davindub


    Some_randomer wrote: »
    There’s a commercial building for sale on a main street in a town down the country that requires substantial refurbishment. It has retail units on the ground floor and some living space overhead. The sale is listed as a “joint option to tax” which means the purchaser will have to pay VAT.

    What I’m wondering is if I buy the property for a business that I’ll be setting up in the next few months (i.e. company isn’t set up or registered yet):

    - can the vendor force the sale as joint option to tax or is it optional?
    - can I re-claim the VAT when the company is set up?
    - could / should I sell the building to the company when the company is up and running?
    - are there any other implications I'd need to be aware of?

    Thanks in advance.

    You can negotiate any clause, but I am guessing that they will not sell because of CGS adjustments. You will also need to be aware of it as you will be subject to it, you will need to stay registered for VAT for the Vat life of building to avoid CGS adjustments as well. You should get advice on this.


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