VAT in property transactions Flashcards
1
Q
What does VAT stand for?
A
Value Added Tax
2
Q
What is the standard rate of VAT?
A
20%
3
Q
What is the rate of VAT in sales of new freeholds?
A
Standard rate
4
Q
In regards to property, when must VAT be charged?
A
If a property is sold within 3 years of its construction.
5
Q
When can the seller choose whether or not to charge VAT?
A
If the property is sold more than 3 years after construction
6
Q
What are VAT sensitive buyers?
A
Buyers that do not charge VAT on their products because they are exempt
7
Q
Give 3 examples of VAT sensitive buyers
A
Banks
Building societies
Insurance Companies
8
Q
Why do VAT sensitive buyers often not purchase property with VAT in the purchase price?
A
Because there is no way for the buyers to recover the VAT, as they are exempt from charging VAT on their products.
