The VAT legislation relating to property transactions changed from 1 July 2008. Letting of property is exempt from VAT although a lessor of a non-residential property can opt to charge VAT on the rent.
Complex issues can arise in relation to:
- disposal of a reversionary interest under the pre-1 July 2008 legislation,
- surrender or assignment of leases in existence on 1 July 2008 (legacy leases),
- adjustment of the deductibility entitlement of a person carrying both a taxable and an exempt activity (capital good scheme),
- disposal of a property by a person who had waived his exemption from VAT under the pre-1 July 2008 rules,
- joint option between vendor and acquirer to tax an exempt sale.
We review VAT Requisitions on Title and ensure the appropriate clauses from The Law Society’s Special Condition 3 are included in the contract.