Builder letting residential property

P

picasso

Guest
If a builder of a residential property decides to rent the property due to the slow market, what are the Vat, Stamp Duty and other tax implications?
 
Yes. He is a sole trader registered for vat who bought a site, built a house and claimed all the input vat. His intention was to sell the property and pay output vat on the sale. However the property has been on the market for a while now. A tenant is available to rent the property with immediate effect.
 
The leasing of the property would be a VAT exempt activity so there might be a clawback of the VAT claimed on the bulid.
 
This is a seriously complicated area, made even more difficult with the new VAT Property Transitional procedures. You should definitely seek advice. I 'd recommend you seek advice from a Top 10 firm who have knowledge in this area.

Does the sole trader trade under a separate name? (i.e. is there any distinction whatsoever between the individual and his sole-tradership?) At what point did he decide to rent the property out?

What you might consider doing is setting up a company and renting the property through a company. (There is still a way around the new rules so that a Company can register for VAT with respect to property.)

This area has not been tested all so far, it's very unclear as to how Revenue will enforce these rules in the beginning months and years.

Seek professional advice.
 
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