VAT and Stamp Duty on Commercial premisis

  • Thread starter blazesoftware
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blazesoftware

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Hi, I am looking at purchasing a commercial retail unit and I am first purchasing the land and then a seperate contract for building costs. Is stamp duty just due on the land value and am I liable for VAT on both. (I am not VAT registered) or is VAT just on the building costs.

What is the stamp duty rates. I had a look at the revenue sites and there are a few tables. Do I concern myself with the one for the Land values ?


Thanks
 
Vat and Stamp Duty

Well the commercial arena is a little different from the private one. You can get this stuff of the revenue, but to summarise.

Bascially ther are two taxes here as you know and it depends on the source of the land. The seller may have to charge you VAT or not.

1. The Land
If the seller is VAT registered you will have to pay VAT on top of the price. This is 21%.
You will pay stamp duty on the land as well.

2. The building
You will pay VAT on the building costs 13.5% is the norm here. You will also pay stamp duty when completed on the deeds of the property.

BTW did you consider registering for VAT? It normally makes sense with commercial property.
 
Re: Vat and Stamp Duty

Hi

The idea of 2 contracts (one for site & one for building) is an effort to help reduce the overall stamp duty liability. It also helps builders increase their profit by rising the price of the building.

If you buy a site, you must pay stamp duty at 9% of the acquisition price. VAT may be payable, it depends on the site & your solicitor will confirm this for you.

Your building will be subject to VAT.

If you register for VAT, you can reclaim the VAT paid but remember, you must then in turn charge VAT on your lease for a period (I think it's 10-years). This is usually not an issue, as the tenant is nearly always VAT registered and can in turn reclaim the VAT. More paperwork though so be warned !

Advantage to being registered for VAT is that if you do, the Bank who funds you should be able to bridge the VAT for you, helping you fund the acquistion if cash is tight - you reclaim the VAT and repay the loan about 2 months after payment is made (subject to you reclaiming the vat etc)

Good luck with it :)

Regards

G>
www.rpoints.com/newbie
 
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