VAT on Property
Specialist advice on the notoriously complex VAT-on-property rules for transactions, lettings and developments.
Getting VAT on property right
VAT on property in Ireland is one of the most complex areas of Irish tax, and one of the most expensive to get wrong. Whether you are selling, buying, letting or developing, the VAT treatment turns on the history of the property, how it has been used and what the parties agree, and the sums involved dwarf the day-to-day VAT a business handles. Specialist advice before contracts are signed protects you from a charge that cannot be undone later.
We advise property owners, developers, investors and businesses across the Midlands on transactions of every size, working alongside your solicitor so the VAT position is clear and correct from the outset.
Why property VAT trips people up
Ordinary VAT is relatively predictable. Property VAT is not, because several special rules interact:
- A property can be “new” or “old” for VAT purposes, and that status changes how a sale is treated.
- Lettings are generally exempt unless the landlord opts to tax them.
- The Capital Goods Scheme can claw back VAT years after a purchase if the use of the property changes.
- Transfer-of-business relief can take a sale outside VAT entirely when the conditions are met.
A single transaction can engage all of these at once. The standard VAT rate of 23% is well known, but property transactions use specific property rules and rates, and the figures involved make any mistake significant.
Sales, lettings and developments
For sales, we establish whether the property is new or old, whether an option to tax is needed, and who bears the VAT, then document the position so it holds up. For lettings, we model whether opting to tax a letting improves your overall recovery or simply adds cost. For developments and refurbishments, we plan VAT recovery from the outset and set up the records the Capital Goods Scheme requires.
The Capital Goods Scheme
If you develop, acquire or refurbish commercial property, the Capital Goods Scheme follows the VAT you recover for up to 20 years. A change in how the property is used during that period can trigger an adjustment, claiming back VAT you recovered or allowing more. We create and maintain your Capital Goods Scheme record so the position is always clear and no adjustment takes you by surprise.
Part of your wider tax picture
Property VAT rarely sits on its own. It connects to your routine VAT returns, to the capital gains tax on a disposal, and often to corporate finance decisions on acquisitions and sales. We make sure the VAT treatment fits the rest of your tax planning rather than being handled in isolation.
Get advice before contracts are signed
The moment to deal with property VAT is before the deal is agreed, not after. Talk to us early and we will confirm the treatment, document it and keep you compliant. Call our Mullingar office or get in touch to book a free consultation.
FAQs
Frequently asked questions
When does VAT apply on the sale of property in Ireland?
Whether VAT applies depends mainly on whether the property is new or old in VAT terms, how it has been used, and what the parties agree. The sale of a new property is generally subject to VAT at the property rate, while older properties are often exempt unless the parties jointly opt to tax the sale. Because getting this wrong can be expensive, every transaction should be reviewed before contracts are signed.
What is the option to tax a property letting?
Lettings of property are generally exempt from VAT, but a landlord can choose to opt to tax a letting so that VAT is charged on the rent. Opting to tax allows the landlord to recover VAT on related costs, but it commits them to charging VAT for the duration and carries conditions. Whether it makes sense depends on the tenant and the costs involved, which is exactly the kind of decision we model for clients.
What is the Capital Goods Scheme?
The Capital Goods Scheme tracks the VAT recovered on a property over an adjustment period, usually 20 years, and can claw back or allow extra recovery if the use of the property changes during that time. Anyone who develops, buys or refurbishes commercial property needs to keep a Capital Goods Scheme record. We set up and maintain these records so you are not caught by an unexpected adjustment.
Can a property be sold without VAT as a transfer of business?
Yes. Where a let property is sold as part of a transfer of a business or letting activity to another taxable person who will continue it, the sale can fall under transfer-of-business relief and be treated as outside the scope of VAT. The conditions are specific and the documentation matters, so the relief should be confirmed in advance rather than assumed.
Get in touch
Let’s talk about your business
Book a free, no-obligation consultation with one of our chartered accountants. We listen first, then show you exactly how we can help.