steady Posted March 2 Share Posted March 2 is there an issue if you build a new build property and let it out after having it zero rated during the build? Link to comment Share on other sites More sharing options...
Dave Jones Posted March 2 Share Posted March 2 yes. pay all the vat back. 1 Link to comment Share on other sites More sharing options...
steady Posted March 2 Author Share Posted March 2 7 minutes ago, Dave Jones said: yes. pay all the vat back. have we payed vat though if zero rated ( i know im being thick) Link to comment Share on other sites More sharing options...
Dave Jones Posted March 2 Share Posted March 2 no you haven't but if you rent it you will have to pay 20% of the lot back. unlikely to be worth renting unless its a massive rent. 1 Link to comment Share on other sites More sharing options...
Russell griffiths Posted March 2 Share Posted March 2 When you put the rental property on your tax return all sorts of things could happen. did you claim the cil dispensation for it being your principal residence. Link to comment Share on other sites More sharing options...
steady Posted March 2 Author Share Posted March 2 1 hour ago, Dave Jones said: no you haven't but if you rent it you will have to pay 20% of the lot back. unlikely to be worth renting unless its a massive rent. so if for example it cost 100,000 to build zero rated there would be a vat bill of 20,000 if rented out ? Link to comment Share on other sites More sharing options...
nod Posted March 2 Share Posted March 2 3 hours ago, Dave Jones said: no you haven't but if you rent it you will have to pay 20% of the lot back. unlikely to be worth renting unless its a massive rent. Spot on You move from self build to commercial venture Link to comment Share on other sites More sharing options...
Temp Posted March 2 Share Posted March 2 3 hours ago, steady said: have we payed vat though if zero rated ( i know im being thick) It sounds like you paid a builder to construct it? In that case he must zero rate everything to you. This is my understanding, I'm not an accountant... If you then let it out you could be required to pay the VAT that the builder did not charge you. In summary, there is a difference between "zero rated" and "exempt" for VAT. A new build is zero rated when sold. A lease is exempt. See section 2.3 and 2.3.1.. https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708 Quote 2.3 The sale or lease of buildings by developers The sale or lease of a building is zero-rated, standard-rated, exempt from VAT or outside the scope of VAT, depending on the circumstances. This notice explains when the sale or lease of a building is zero-rated. The first sale of, or long lease in a: new qualifying dwelling or communal residential building, or a new qualifying building used by a charity, by the person constructing it (read section 4)qualifying dwelling or communal residential building converted from a non-residential building, by the person converting it (read section 5)substantially reconstructed protected building by the person reconstructing it, subject to the changes implemented on 1 October 2012 (read section 10) An explanation of when the sale or lease of a building is standard-rated or exempt from VAT can be found in Land and property (VAT Notice 742). 2.3.1 Input tax relating to exempt and taxable supplies With the exception of certain specified costs (business entertainment, incorporated non-building materials, cars), you’re entitled to deduct input tax incurred on costs that you use or intend to use in making taxable supplies (including zero-rated supplies). You cannot normally deduct input tax incurred on costs that relate to your exempt supplies. If your input tax relates to both taxable and exempt supplies, you can normally deduct only the amount of input tax that relates to your taxable supplies. Link to comment Share on other sites More sharing options...
Temp Posted March 2 Share Posted March 2 This might be an easier read.. https://www.macfarlanes.com/what-we-think/in-depth/2017/build-to-rent-vat-issues/ Quote The position is more complicated for developers who are building to rent. The grant of short leases to tenants are not zero-rated and will not entitle the developer to recover VAT on development costs Link to comment Share on other sites More sharing options...
Temp Posted March 2 Share Posted March 2 The solution might be a sale into a company you set up (or a relative or spouse or child trust?) before they let it out. There would be stamp duty to pay but that will be less than VAT. The CIL might also be an issue if you claimed the self build exemption. Speak to an accountant that understands these issue. Link to comment Share on other sites More sharing options...
Canski Posted March 2 Share Posted March 2 How long would this rule apply for ? Surely it can’t be indefinitely. Link to comment Share on other sites More sharing options...
steady Posted March 3 Author Share Posted March 3 15 hours ago, Temp said: It sounds like you paid a builder to construct it? In that case he must zero rate everything to you. This is my understanding, I'm not an accountant... If you then let it out you could be required to pay the VAT that the builder did not charge you. In summary, there is a difference between "zero rated" and "exempt" for VAT. A new build is zero rated when sold. A lease is exempt. See section 2.3 and 2.3.1.. https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708 we havent started yet .hence the research can we build one live in it ex number of years then let it out and then build the the next on ? Link to comment Share on other sites More sharing options...
Russell griffiths Posted March 3 Share Posted March 3 14 hours ago, Canski said: How long would this rule apply for ? Surely it can’t be indefinitely. 3 years I think. 1 Link to comment Share on other sites More sharing options...
Canski Posted March 3 Share Posted March 3 1 hour ago, Russell griffiths said: 3 years I think. I need a new retirement plan 😂😂😂 Link to comment Share on other sites More sharing options...
SteamyTea Posted March 3 Share Posted March 3 You can, if you technically live in the property (read what you like into "technically live in"), get boarders (lodgers) and if the revenue is below a certain amount ((7,500 I think), not have to declare it. Lodgers always used to be easy to get rid of as well (weeks notice), but that may have changed in the last decade since I had one). Link to comment Share on other sites More sharing options...
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