VAT Loans

While many commercial properties are exempt from VAT, this only means that the tax can be recouped - it will still need to be paid in the first place. This is a significant burden for developers, because while they may eventually get their money back sinking an additional 20% into a purchase for 2-3 months severely restricts their ability to take on new projects in the meantime. Because VAT can be payable when you sell a property as well as buy it, both parties in the transaction are liable for sudden expenses, and while the vendor may not need to pay VAT on the building itself, they will likely become liable for other VAT-related costs.

VAT is not always payable on a property transaction, which means it can sometimes trip up unwary buyers; the sudden discovery that there’s a 20% fee payable is a nasty shock for investors who thought they had the deal all sewn up. In short, VAT is usually payable on new commercial property sold as a freehold, and most other buildings are exempt.