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vat on rent

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  • 07-12-2019 7:10pm
    #1
    Mad_maxx
    Registered Users Posts: 13,505 ✭✭✭✭


    its quite unbelievable the amount of mixed messages when it comes to whether a landlord can charge Vat on the rent of a residential property , my own accountant told me in the past week that there is no vat on residential rent .

    but ignore the mediocre mind of a small town accountant , ive read pieces from the likes of Deloitte which said you can but pieces from the law society itself which stated that vat is no longer charged on rent in the case of residential letting

    i want to point out that im not in the vat net myself , im just frustrated by the level of ambiguity


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  • Options
    #2
    Sarn
    Registered Users Posts: 3,059 ✭✭✭Sarn


    From revenue:

    Can the landlord's option to tax a letting apply in all cases?
    No. There are restrictions on the option to tax rents. The option to tax cannot apply in the following circumstances:

    Where the property is occupied for residential purposes.

    Where the letting is between connected persons. However, if the tenant is entitled to deduct at least 90% of the tax chargeable on the rent, this restriction does not apply.

    Where the property is occupied by the landlord, or a person who is connected with the landlord. This rule applies whether or not the agreement between an unconnected tenant (who holds the original lease from the landlord) and the person who occupies the property is a letting agreement or any other agreement (for example, a licence) which allows the person to occupy the property (see example below). However, if the occupant is entitled to deduct at least 90% of the tax chargeable on the rent, this restriction does not apply.


  • Options
    #3
    DubCount
    Registered Users Posts: 1,065 ✭✭✭DubCount


    The default position for all property letting is that it is a VAT exempt activity. For commercial property you can opt to waive the VAT exemption, but this option to waive exemption is not available in the case of residential lettings.

    https://www.revenue.ie/en/vat/vat-on-property-and-construction/vat-and-letting-property/can-the-landlords-option-to-tax-a-letting-apply-in-all-cases.aspx

    Even if it was allowable, I cant imagine why anyone would waive VAT exemption on residential lettings. Tenants are very unlikely to be VAT registered, and most of the major cost inputs (Mortgage Interest, RTB Fees, Insurance etc.) are also VAT exempt.


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    #4
    DubCount
    Registered Users Posts: 1,065 ✭✭✭DubCount


    Mad_maxx wrote: »
    ….the mediocre mind of a small town accountant …..

    Regardless of his/her IQ, I would agree with your small town accountant.:D


  • Options
    #5
    paul71
    Registered Users Posts: 3,108 ✭✭✭paul71


    Prior to 2008, there was an option open to landlords to opt into VAT on residential properties. Any landlord/properties continually rented and in same ownership which opted in prior to 2008 are still subject to application of VAT.


  • Options
    #6
    paul71
    Registered Users Posts: 3,108 ✭✭✭paul71


    DubCount wrote: »
    The default position for all property letting is that it is a VAT exempt activity. For commercial property you can opt to waive the VAT exemption, but this option to waive exemption is not available in the case of residential lettings.

    https://www.revenue.ie/en/vat/vat-on-property-and-construction/vat-and-letting-property/can-the-landlords-option-to-tax-a-letting-apply-in-all-cases.aspx

    Even if it was allowable, I cant imagine why anyone would waive VAT exemption on residential lettings. Tenants are very unlikely to be VAT registered, and most of the major cost inputs (Mortgage Interest, RTB Fees, Insurance etc.) are also VAT exempt.


    To claim back the VAT on the construction.


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