VAT query on a commerical investment.

S

seanie72

Registered User
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I signed contracts to purchase a commercial property (industrial unit) back in April 2007, I signed them in trust and my intention at the time was to flip the contract onto another buyer before I had to close (I had approval from the developer to do this). I am not VAT registered, I was aware at the time that the purchase was subject to VAT at 13.5%, but at the time I was confident of flipping the contract before I had to close. As the market has slowed down its unlikely that I will find a buyer before I have to sign final contracts.. I have also a couple of residential properties and I believe if I register for VAT now then I need to start charging VAT on the rent monies that I receive from the, if this is correct its not an avenue I want to go down.
Is there any other vehicle by which I can reclaim the VAT?
If I sell the property in a few years time will I have to charge VAT on the purchase price even though I am not registered for VAT?
 
Registering for VAT now will NOT bring your residential properties into the VAT net.
 
Thanks for your reply

Are you saying any properties purchased before I register for VAT will not be brought in the VAT net but all properties purchased after I register for VAT will?
 
No, I am saying that following the Finance Act 2007, short term (less than 10 year) residential property lettings cannot be brought within the charge to VAT, even if other commercial lettings are.

In any case, as you have purchased a newly developed property, you will be obliged to charge VAT on a re-sale and so should be registered for VAT.
 
Thanks, one more question -

If I sell any of my other residential properties will I have to charge VAT on the re-sale?
 
Presuming you didn't reclaim VAT on the purchase/construction of these houses (and weren't entitled to as you were going letting them) no VAT is chargeable on the sale of these properties.
 
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