Avoiding VAT on Self-Build

D

daddycool

Guest
Unlike our NIRL counter-parts, self-builds in the south cannot re-claim VAT (I think). I am building by contractor and will be 'enjoying' an 80k VAT bill on top of the cost. This seems grossly unfair as if I bought a 2nd hand house for the same value I'd only pay 7% stamp duty as opposed to twice that through VAT (13.5%)

Any accountant types out there like to suggest a way of avoiding the VAT (as opposed to evading!). Setting up a property co., registering it for VAT, reclaiming the VAT seems the obvious way but then my PPR is owned by a company. No big deal I guess as I'd own the Co. but on disposal years later then there'd by CGT and corpo Tax and is that all a bit messy

Any bright thinkers (who perhaps advised Bertie Ahern in the early 90s?)
 
In a second hand senario the original purchaser of that property paid the VAT. In your senario you are the original purchaser so you pay the VAT.

You cannot setup a company to build/Own your house and reclaim the VAT as the end user must pay the VAT again in this instance the Company would have to pay it in the end.

If you were to rent out the property you could register for VAT reclaim the VAT but then you would have to return the VAT on the rental income.

There is no real way of getting away with the VAT apart from the ever increasing blackmaret cash on the labour element, but the material will have to be including VAT unless you can purchse via someone in the know.
 
Tx k - on that rental suggestion, if the co. owns the property and rents it (for a nominal sum thus charging VAT but very little of it) would that fall foul of the law. The co. buys as asset for 600k+, reclaims the VAT, then charges rental on the property (but only charges a €600 per year rent + 21% VAT) thus returns €126 per year VAT having reclaimed 80k in the 1st instance

Might get messy as the director of the company is the one benefiting from the low rent charged and thus a BIK might be due. Also still leaves the house in the hands of a company as opposed to directly in mine, and that might be messy for CGT and Corpo Tax on sale

Still 80k is a lot to be paying in VAT - no blackmarket here as it is with one contractor
 
to be fair a director renting a 600k property for 600 a year from its own company would be classed in revenue circles as tax avoidance and you can be sure its not allowed

a director cant take a loan from a company anymore so i cant see why it would be allowed have a property for next to nothing.

you would also have to pay VAT on the sale of the property if you ever went to sell it which would negate any possitive on it as it would be more than you reclaimed unless you sell the property at a loss.
 
If you put the property into the company you will not be able to get it out with out paying capital gains on it @20% it would be cheaper now to pay the subcontractors @ 13.5%
 
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