VAT on property lease

O

ohtwo

Registered User
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Hi,

I'm in the process of leasing a commercial premises (shop).
The landlord has decided to charge VAT on the lease because he says that since July 1st this year he must charge VAT.

I checked the Revenue Guide entitled 'Vat on Property Guide' and it seems to indicate that I would be exempt from paying VAT on a lease since July 1st.

Does anyone know which is true? (the revenue guide would obviously be correct but I'm doubtful if I'm reading it correctly due to what the landlord has said)

Thanks
 
You'd need to post more details. VAT on leases cam be a complex issue. Sometimes paid with the rent payments, sometimes lump sum in advance.....etc. Duration of the lease, type of lease etc all have a bearing.
 
its a 20 year lease and the payments will be made either monthly in advance or quarterly in advance. Not sure about type of lease
 
Under the new rules applying from 1st of July 2008 leases are exempt from VAT unless you opt to tax them.
 
The Landlord can't opt to tax unless the tenant agrees to it. The landlord thinks it's in his best interest to opt to tax. If the landlord has reclaimed VAT on the purchase then for every year he doesn't opt to tax he has to pay a certain amount back. Generally it's not in the interest of the tenant to opt to tax, many many many exceptions apply!

The new VAT on Property rules are seriously complex at the moment, you need professional advice on this topic as it's something that could seriously effect you. Interest and penalties on VAT on Property issue can amount to fancy figures.

I'd recommend you go to a Tax Consultant firm as a normal accountant isn't going to have the hands on knowledge with the new rules. Some of the top ten firms have actually set up VAT on property departments, this is normal in the big 4 but not in the other top firms!!

There are fun times ahead with VAT on Property!
 
You don't need to use a big four firm. You would be charged extremely high fees for what could turn out to be a relavtively simply matter in what is a complex area of law. You can also use an independent tax advisor who has extensive experience in VAT on property. Check the Irish Taxation Institutes list of advisors () and you will find one capable. I know one myself.


Iceman732 said:
The Landlord can't opt to tax unless the tenant agrees to it. The landlord thinks it's in his best interest to opt to tax. If the landlord has reclaimed VAT on the purchase then for every year he doesn't opt to tax he has to pay a certain amount back. Generally it's not in the interest of the tenant to opt to tax, many many many exceptions apply!

The new VAT on Property rules are seriously complex at the moment, you need professional advice on this topic as it's something that could seriously effect you. Interest and penalties on VAT on Property issue can amount to fancy figures.

I'd recommend you go to a Tax Consultant firm as a normal accountant isn't going to have the hands on knowledge with the new rules. Some of the top ten firms have actually set up VAT on property departments, this is normal in the big 4 but not in the other top firms!!

There are fun times ahead with VAT on Property!
Click to expand...
 
The Mob,

I never said you need to use a top ten, I said you should use a tax consultant! This would include an independent tax consultant!
 
Fair enough. I never said that you said one should use a top 4 firm. I was simply saying to the op that it wasn't absolutely necessary


Iceman732 said:
The Mob,

I never said you need to use a top ten, I said you should use a tax consultant! This would include an independent tax consultant!
Click to expand...
 
Never under estimate Revenue's capacity to make a taxation issue complex and too difficult for the lay person to understand.
 
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