VAT on property is a very complex area and generally correct advice is only to be given having had regard to all the specific facts of each case. Most of these facts are not available to me so I will give a summary of the applicable law in this area.
A good place to start is to look at whether the property is already within the charge to VAT. This can be determined simply by asking the vendors whether VAT is chargeable on the sale price of the property. If the answer is no it should be safe to assume that the property is not currently within the charge to VAT especially if the property is an older undeveloped residential property.
On the basis that the property is not currently with in the charge to VAT one must consider whether your 'fixing up' work would be considered as having 'developed' the property which would cause it to be brought within the charge to VAT.
'Development' for the purposes of VAT legislation has a specific definition which i wont go into now - although generally expenditure less than 10% of the property's value or € 300,000 (whichever is lesser) is ignored and will not bring the property within the charge to VAT. This is a Revenue Concession.
The strict legal interpretation of the VAT Acts suggest that one must also look at the intention of the individual when undertaking such a project, if the project is undertaken commercially to fix up and then sell on the freehold property for profit then strictly speaking you are making a supply of property in the 'furtherance of business' and VAT should be charged at 13.5% on the sale price of the property where the property has been 'developed'. In this scenario you will be able to claim the input VAT on your costs.
If, however, your intention is to buy a house which you think you might live in and after the works are complete you decide that you dont want to live in it after all and then you sell it - you could argue that the sale was not made in the course of business and that therefore there is no VAT chargable on the supply despite the fact that you have developed the property.
I should warn you again that VAT is a complex tax and that due to the amounts of money in question - I would generally advise that specific tax advice be sought from a specialist. In addition, you should note that the Law relating to VAT on propety will change dramatically in the next finance act (2008).