Property developing VAT

by Readers Question

10:33 AM, 28th January 2014
About 7 years ago

Property developing VAT

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Property developing VAT

I know this site is mainly for renting, but a lot of landlords also flip properties so may be able to help.

If I was to buy, modernise and sell 3 properties each worth £100k in a year, hopefully making around 50k total profit (before tax), would I have to be VAT registered on the basis of my total turnover? Property developing VAT

If I did have to be VAT registered for developing would I then have to involve my rental business (turns over 70k a year)?

We’re a husband and wife team, what would be the best way to set-up tax wise?

Thanks

Sally T

 



Comments

Mark Alexander

10:41 AM, 28th January 2014
About 7 years ago

Hi Sally

I strongly recommend you to take professional accountancy advice on this as the tax savings are likely to amount to many times more than the cost of the advice.

As a general rule, it is better to develop via a limited company at this level and to own rental properties as individuals.

As for VAT, this is not my specialist subject but if you can reclaim the VAT on your developments this could reduce your costs quite significantly and remember; there is no VAT payable of the sale of residential property.

I use a specialist accountant for all property related activities. They are based in Norwich but advise clients worldwide of UK property taxation matters. Please see >>> http://www.property118.com/member/?id=452 and also this article >>> http://www.property118.com/landlord-tax/

This website is for all matters property related by the way, not just for rental properties, we also carry articles on residential, commercial and development property. Also see this "Ask Me Anything" thread >>> http://www.property118.com/i-am-a-property-developer-ask-me-anything/44690/
.

Jason Holden

11:46 AM, 29th January 2014
About 7 years ago

Hi Sally

If you are refurbishing property in the residential market then this is exempt for VAT purposes (unless you opt to tax) so the answer is no, as exempt turnover is not included when looking at turnover and vat registration.

Sorry it took so long to answer but January is silly season for accountants.

Regards

Jason

DISCLAIMER:
We have not carried out any specific work with regard to this statement. This statement is provided without acceptance by Holden Associates Limited (its staff or directors) of any responsibility whatsoever, and any use you wish to make of the information is, therefore, entirely at your own risk.

Sally T

13:10 PM, 29th January 2014
About 7 years ago

Reply to the comment left by "Jason Holden" at "29/01/2014 - 11:46":

Thanks for reply, our own accountant isn't knowledgeable in this area and told us we would have to register for vat straight away, as the price of the property would take us straight over the vat threshold. This scared the life out of us and really put us off.
Looks like we'll be selling our house for a new venture, yippee 🙂

Jason Holden

16:01 PM, 29th January 2014
About 7 years ago

Reply to the comment left by "Sally T" at "29/01/2014 - 13:10":

Then, maybe you should find an accountant who is knowledgeable 🙂

The right accountants do have their uses 🙂

Regards

Jason

Sally T

20:20 PM, 29th January 2014
About 7 years ago

That is good advice, hard to find one in our area, they're all a bit set in their ways 🙁

Jason Holden

21:32 PM, 29th January 2014
About 7 years ago

Reply to the comment left by "Sally T" at "29/01/2014 - 20:20":

An accountant doesn't have to be local, most of our client base is anything but local.

Jason

Mark Alexander

21:51 PM, 29th January 2014
About 7 years ago

Reply to the comment left by "Jason Holden" at "29/01/2014 - 21:32":

I agree Jason, my recommended accountant has clients all over the UK - see >>> http://www.property118.com/member/?id=452

You could also have a Members Profile like this if you want to upgrade.

We are also looking for a Guest Blogger on Property Tax, see >>> http://www.property118.com/ever-thought-about-blogging-about-property-in-your-town/61985/
.

Shirley Brumpton

23:49 PM, 31st January 2014
About 7 years ago

Hello, I am a Tax Advisor specialising in VAT. Dwelling rental is exempt from VAT and does not count towards VAT registration. This means that you don't pay VAT on the income but neither can you reclaim VAT on purchases and expenses. Different rules apply to Commercial property projects and specific advice should always be sought from a professional and insured VAT specialist such as myself. You should also consider whether any VAT reliefs apply to your specific project - if you are employing a builder, certain works may attract a reduced rate of VAT - you need to check your specific facts with a VAT specialist. I'll be happy to talk to you if you wish but I am out of the country until 3rd Feb.

Mark Alexander

8:29 AM, 1st February 2014
About 7 years ago

Reply to the comment left by "Shirley Brumpton" at "31/01/2014 - 23:49":

Hi Shirley and welcome to Property118, it's good to have another Tax Advisor on board.

Have you considered upgrading your member profile to Business Member status?

This would allow you to add your phone number, email address, a link to your website, social media account, your business logo and a bio about you and your business. In your comments, you could leave a note at the bottom to say "if you want to contact me see my business member profile".

Several members here who also provide services to landlords have taken these upgrades and receive a lot of business as a result of it 🙂 Obviously the more knowledge and helpful you are in your comments, the more exposure you get to members. Not that for every person who comments there will be hundreds of other members in a similar position reading those comments.

It's a nice way to find new clients and to get a return on your time investment too 🙂
.


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