Reclaiming VAT on holiday home purchase

  • Thread starter investor100
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investor100

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Hi there. I am hoping to purchase a holiday home at home in the west of Ireland. I hope to rent it out on a weekly basis from May - Oct and maybe at Xmas and Easter and bank holiday weekends etc and use it myself occasionally if free.
The guide price is E270,000. Its a new house built by a builder to be sold for profit. There is quite a lot of interest in it and if I want it I may need to bid 10 or 15 thousand euro in excess of the asking price.

I have been told I can claim the VAT back as long as I collect VAT on all lets for the next ten years. Otherwise there is a clawback facility. My questions are,
1) is it 13.5 % of whatever you end up paying for the property.ie in this case perhaps 285,000 euro?...or 13.5 % of the cost of buliding materials plus site(in other words not including builders profit and labour)

2)If during the winter it's quiet and I decide to let to a local person for say 6 months will I be in trouble as under the initial terms I was supposed to be letting to holiday makers or will it be ok as long as I pay VAT?(people renting may want rent relief so i'm sure it's easily spotted)
Many thanks and grateful for any advice
investor 100
 
Hi again.
I should have said that I have a property rented for the past few years. Will I have to start collecting VAT on that or if I ever buy another investment property in the future will i have to collect VAT on it?
many thanks
investor 100
 
Hi there again,
May be of some help I am currently researching this vat area,
1.The Vat can only be reclaimed on building and materials.,not on the value of the site.
2.Vat is reclaimed at 13.5% as a lump sum.This basically has to be repayed from rent where Vat is charged at 21%.
3.This can be done over ten to 15 year or you can pay it back earlier and then deregistar
4.The benefits are use of lump sum interest free and Income tax is not paid on the Vat charged on rent.
I am doing this on the purchase of a new house /houses and am awaiting clarificatin from my Accountant.I would be keen if you had any further comments.

Poundmaster
 
vat

Hi there
Have decided not to go ahead with this project. Have decided to do something else and have put a post up on it here. I did ring VAT in Co clare and they told me it was 13.5% of the total cost so maybe check that out. If you own an investment property or intend buying one inside the next 10 years you will have to pay vat so be careful!
investor100
 
Re: vat

Hi investor100,
Thanks for reply,yes I do intend to move on this project. I am already Vat reg, my wife is PAYE,in consultation with her of course! I plan to vat reg her for a limited period 5-10 years and buy two houses(new) as investments this year in my wife's name only.I will pay the vat back over as long a period as possible, dereg when complete.
we have one other investment property in joint names. I will have to look into my vat liability on this,it may have to be move into my name only along with any other further investments.
I have been watching your other post with interest, and I am with you on it.If you can rent them and good houses in good area Go for It! I have yet to be stung on an investment therefore would risk more.

Poundmaster
 
int only purchases

Thanks for the good wishes. I wouldn't classify them as great houses but they are in a reasonable location and are competively priced and I feel there should always be a demand for them if I need to sell them. Good luck in ur own project!
investor100
 
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