Built and selling a one-off house, will new-build Vat rate apply to the house and/or site price?

[Aladdin]

Trying to figure out how this works, I'm building a house on a site I own which will be complete soon and I have a buyer ready to go. My solicitor confused me by suggesting that the contract for sale be split into two parts, one for the site and another for the house and says this is typically done for new builds.
Not sure re Vat though - I didn't register for any Vat throughout the build but the sale price will obviously need to include that, but does the same apply if we separate out the site and house?
Having only ever sold second-hand houses before I'm uncertain abou the done thing for new builds, especially since I'm not a developer or anything, just an ordinary Joe.

 

[Brendan Burgess]

What did your accountant or tax advisor suggest when you embarked upon this project?

 

[Aladdin]

I didn't use an accountant for this, it's merely a personal project unrelated to any business.

 

[T McGibney]

If you develop and sell a new house before it is lived in, it is indeed a business and you are treated as a developer.

You really need appropriate tax (and possibly legal) advice on this asap.

 

[Aladdin]

My accountant mentioned that I'd need to pay CGT on the profits etc, but nothing about being treated as a developer, had not anticpated that! Does it considerably change the tax situation then? And I guess this must be why the solicitior wants to split up the contract.

 

[T McGibney]

It would be highly likely to radically change the tax situation. The whole area is an absolute minefield, with possible income tax, RCT, PAYE/PRSI implications.

 

[Aladdin]

Spoke to my accountant who advised its more straightforward to just put the house in my own name and sell on as a second-hand property, then the Vat issue won't apply - is this correct? Or kosher.

 

[T McGibney]

Sounds like VAT fraud. If you're doing this, you'll need to find a crooked solicitor, as honest ones will run a mile from it.

Did your accountant really advise this?

 

[Aladdin]

Did your accountant really advise this?

He says its no different to someone building a house in their own garden and taking ownership because no purchase happens, no Vat applies but it does sound a bit dodge to me too. My concern is how will it work for the site, and when I haven't registered for Vat how do I claim back for my expenses?