Living temporarily in Investment property

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Madilla

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I am awaiting a planning decision on a house with attached two bed apt which I intended to have as an investment property. I registered for VAT and had no intention of ever living in the property. Now however due to a change in circumstances I am selling my PPR and intend to live in the house for about 12/18 mths when I build another house. Where do I stand in relation to reclaimimg VAT on build but using as PPR for a short period of time. I would be renting the apartment. I had thought I could charge myself rent and account for VAT on this but would I then be liable for income tax on this income ? Any advice much appreciated.
 
Madilla said:
Where do I stand in relation to reclaimimg VAT on build but using as PPR for a short period of time. I would be renting the apartment. I had thought I could charge myself rent and account for VAT on this but would I then be liable for income tax on this income ?
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I dont think you can do this. VAT can only be re-claimed on an investment property so it cannot also be a PPR. For revenue purposes all lettng agreements must be " at arms length" therefore this rules out renting to your self.
 
If I charge myself a proper market rate of rent at arms length, I would then acoount for the VAT on this rent. Would I be liable for income tax on this rental income? Even if I have to pay income tax (which would be small when I net off expenses and interest on loan) would it still not make sense as I would have the an interest free loan of the amount of the VAT reclaim which would be in excess of 20k.
 
AFAIK - A rough defination is that the parties to the transaction are independant.

In this case you are not independant (you are the same) so in my openion what you are proposing would not be allowed
 
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