Is there VAT to be paid when selling new homes

W

willbee

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Hi everyone.
I am about to sign Contracts selling a new home that
I built in the last year, I am aware that I have 20% CGT to pay on the profit but my solicitor said I might have to pay 13.5% VAT also because it is a new home, My accountant said because i wasn't registered for VAT, I was ok not to pay. Have ye any advice?
 
Have you developed the house since 1973?

Have you rented the house and waive your short term exemption to charge vat.

See alot of investor register for Vat while they purchase a house to renovate it , they then have to charge vat on the rental and make vat returns to the Revenue.

If you havent developed it and rented it, is there any chance that you where charged Vat when you bought it from the previous owner, they may have developed the property.
 
Let me clarify kluivert,
I built the house in the last 2 years on a site I bought privately. I was going to live in it myself but circumstances changed and now I have to sell it on. The house is brand new.
 
willbee said:
Let me clarify kluivert,
I built the house in the last 2 years on a site I bought privately. I was going to live in it myself but circumstances changed and now I have to sell it on. The house is brand new.
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Did you claim back any of the VAT on materials or services you used in the construction?

I believe this makes a difference (so my accountant advised me when he said not to claim back any VAT for the business portion of my house). If you did not, then you should not have to charge VAT.

You may have to pay CGT on any profit you make (as it was not your PPR), so I hope you have all those receipts ready!
 
Yes Yoganmahew,
I have all receipts at the ready and am prepared to pay cgt, but this was not meant to be an investment property. I have not claimed any of the VAT because I was not registered for VAT. So it was a surprise When my solicitor said I might have to pay it.
 
Sorry didnt read that reply correctly.

Basicly the rule is, if you re-claimed vat on the building of your house, then you charge vat on the sale of the house.

and vice versa.
 
Kluivert, it's not that simple. If you were entitled to reclaim the VAT, you charge VAT.

In this case, Willbee did not develop the site and build the house as a business venture and so was not entitled to a VAT reclaim. He therefore does not have to charge VAT on the sale.

Willbee, as you never lived in the house the Revenue might ask questions about the transaction. Any evidence you have to show that your original intention was to live there and that this is not happening due to a change in circumstances, should be kept in case you need to explain yourself.
 
Thanks guys for the advice,
My accountant rang me today to tell me as a once off there is no VAT issue when it didn't start as an investment venture. I can go ahead and sign contracts of sale without the worry of VAT payment.
 
Are selling the house as a new home ? As if so, you might be treated by revenue as a developer and could have to pay income tax on the property rather than capital gains.
Sometimes when one off houses are built and sold without the owner living in the site, the houses are sold 1 - 2 years after being built. This is often so that the tax is at capital gains rate rather than the income tax rate. The house is then sold as second hand rather than new.
 
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