VAT when selling a doer-upper?

I

iano086

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If I buy a residential property (which is not my PPR) with the intention of doing it up and selling it, do I have to charge VAT at the point of sale?

Thanks

iano
 
Joe_90 said:
Assuming you are doing this in the course of a trade.
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Is there any other way to view it if it's not your PPR (perhaps doing up and selling an inherited property perhaps - although that wouldn't involve my buying?)


If you buy it from a private seller ie a VAT exempt person selling to you have to develop it to bring it back into the VAT net.
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I've had a read through your link which was very useful, thanks! The Revenue explanation certainly attempts to be clear and unambiguous but as one unfamiliar you get left with questions. I'll read the whole article which will probably give me a better idea of the spirit of the law.

It does seem though that you can develop to a degree without bringing the property, as you say, back into the VAT net.

Once a) you're not changing the basic use (a residential property remains a residential property, a retail outlet remains a retail outlet) and b) not spending any more that 25% of the ultimate sale price on said developmental work, the sale is VAT exempt.


You should seek professional advise as RCT may apply and you don't want to get that wrong.
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I heart askaboutmoney! The free advice helps educate for any subsequent professional advice that might be warranted. Nothing worse than walking into a professional without any idea of how the measure them up good or bad.

What's the plain English notion behind RCT? Revenue seem to describe it as a tax on main contractors subbing out work (which wouldn't be the case with me, I wouldn't have thought, since I'm not the main contractor. It has the sense of being a tax applied to cover a tax advantage a main contractor would gain merely by subbing out the work?

Edit: just noted being linked directly to the relevant section in your link - neat!
 
Joe's link to Revenue's view on VAT on the sale of second hand residential property above raises questions:



"Minor development .. can be described as development on a building that does not (and is not intended to) adapt the building for a materially altered use, provided that the cost of such development does not exceed 25% of the consideration for the supply of the building. In other words, if the property is either materially altered or the cost exceeds 25% of the sale price in the five years prior to sale, then the property will be taxable because the development is not minor"
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Suppose you've bought a doer-upper for a 100k. It costs another 80k to have a single storey extension done as well as redo the interior: floors, rewiring, new heater, decor. Legal, sale and other costs are another 10k. You sell for 270k
a) would the legal etc costs be considered part of the development cost?

b) Is there a distinction between that portion of the 80k which went on development and that which went on restoring the existing building? 'Distinction' in the sense of the latter outlay not contributing to the 25% developmental threshold permitted.
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But then comes this right next..

"Where a person adds an additional subsidiary building to the existing building such as an additional floor or an extension, Revenue would not generally consider this to be "development of a previously completed building"
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This is confusing me. They don't say major or minor development .. of a previously completed building (such as the doer upper up top), just development. But if a single storey extension isn't considered a (major or minor) development then what is?



Can anyone illuminate?
 
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