Supply of property

When is the supply of a property exempt?

When the supply takes place later than the date provided for under the two-year, five-year and 20-year rules, the supply of the property is exempt from Value-Added Tax (VAT).

However, where the supply takes place within the VAT life of the property, there will be Capital Goods Scheme (CGS) implications related to the supply. (See Capital Goods Scheme (CGS) — other adjustments).

Where the property is residential property, the supply by the person who developed it in the course of business (for example, a property developer) or by a person connected with the property developer, is always taxable.

Can you opt to tax exempt supplies — joint option to tax?

In the case of an exempt supply of property, the vendor and the purchaser may opt to make the supply taxable where both are: 

  • taxable persons
  • and
  • carrying on a business in the State.

The joint option for taxation cannot therefore be exercised when either or both of the parties are engaged in activities which are outside the scope of VAT. The joint option to tax is a shared decision and must be exercised by an agreement in writing between the parties to the transaction.

Where the option to tax is exercised, the purchaser, and not the vendor, is responsible for accounting to Revenue for the VAT payable, under the reverse charge system. The purchaser should register for VAT if they are not already registered.

Next: VAT treatment of options, easements and rights of way