Can I Claim VAT on Purchased Property?
If I buy a property as a new company and carry out building work (new and repair), can I claim back the VAT spent. Can I also then pay myself with dividends?
Arthur Weller Replies
Generally, if the property is a residential property then a landlord is making exempt supplies and whether he is an individual or a company, he cannot reclaim back the VAT spent on new building works and repairs on an existing property. However, VAT is charged at the reduced rate of 5% on the supply of services and building materials for the conversion of non-residential property into dwellings, conversion of residential property into a different number of dwellings, conversion of residential or non-residential property into a multiple occupancy dwelling and the bringing into use of a property that has been empty for three years and some other circumstances.
You can always pay yourself dividends from your company, provided the company has enough distributable profits in the profit and loss account to do so.
See pages CTM20090/5 on the HMRC manuals:
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