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Is There VAT On Sale Of Commercial Property?

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When selling commercial property in the United Kingdom, it is important to determine whether Value Added Tax (VAT) applies. In most cases, the sale or lease of a commercial property is exempt from VAT. However, there are certain circumstances where VAT may be charged.

One situation where VAT may apply is if the property owner or developer has opted to tax it. Opting to tax means that the owner has chosen to charge VAT on the sale or lease of the property, even though it would typically be exempt. This is often done to enable the owner to reclaim VAT on costs associated with the property, such as construction or renovation expenses.

If an owner has opted to tax a property, they must charge VAT on the sale or lease of that property. For example, if a developer has opted to tax a newly constructed office building, they would charge VAT on the sale price to the buyer. The buyer, if they are a VAT-registered business, could then reclaim this VAT.

It’s important to note that once a property has been opted to tax, this cannot be easily reversed. The decision to opt to tax is generally irrevocable, although there are some limited circumstances where it may be possible to revoke the option to tax. This is a complex area, and professional advice should be sought.

If a property is not opted for tax, then the sale or lease will usually be exempt from VAT. This means that no VAT is charged on the transaction. However, it also means that the owner cannot reclaim any VAT on costs associated with the property.

There are some other situations where VAT may be charged on a commercial property transaction, even if the property is not opted for tax. For instance, if the sale is part of a transfer of a going concern (TOGC), where a business is sold as a complete operational entity, VAT may be chargeable. The rules around TOGCs are complex, and professional advice should be sought in such situations.

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How much is VAT when selling a property?

The basic rate of VAT is 20% when selling a commercial property.

Is there VAT on sale of commercial property
While the sale or lease of commercial property in the UK is typically exempt from VAT, there are circumstances where VAT may be charged.

Taking Control of Your Commercial Property Sale

When it comes to selling commercial property, many owners instinctively turn to traditional methods, such as engaging a commercial property agent. However, this approach often comes with its own set of challenges and delays that can frustrate sellers and prolong the process. If you’re looking for a more streamlined and efficient way to sell your commercial property, it’s worth considering the benefits of selling directly to Property Saviour.

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Additionally, selling directly to Property Saviour can provide greater flexibility compared to traditional sales routes. They can work with you to structure a sale that meets your specific needs and timelines, whether that’s a quick sale to free up capital or a deferred completion to give you time to relocate your business. This level of flexibility can be particularly valuable if you’re facing time pressures or other constraints.

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