VAT on New Sale

[Simon]

Can anyone advise on the rules for VAT when purchasing a new house.  We will buy the house directly from the developer, mostly completed apart from, floor tiles, bathrooms and kitchen, which will be completed separately.

The developer wants us to pay an amount for the house (let's say X) and then another amount once the other work is completed (let's say Y).  If we sell within the 1st 5 years what liability for VAT will have to be paid?

Is this just a mechanism for the developer having to avoid paying VAT because the house isn't completely finished? 

Thanks for any help.

[BJSLIV]

You will pay the same VAT on any invoice from the builder whatever the payment pattern. Supply without tiles, kitchen, and bathroom is the norm, allowing flexibility of style and  supplier. You can even wait a couple of years and fit a second bathroom at the lower rate of VAT. If you are buying these finishing items from the builder, you may find that you are invoiced by the subcontractors.

If you come to sell within the first five years 16.4% of the sale value will be deemed to be VAT . The amount actually deducted will be reduced by any VAT that you paid during the construction process, so hang on to the bills.

[Nickndrachael]

How does this 16.4% deemed VAT work?  I'm about to sell my 2 year old house and I wasn't expecting any more bills...

[BJSLIV]

You have a new house built for 100,000 euros plus 19.6% vat so the  total cost is 119, 600euros.

You sell at 165000 Euros   This is deemed to include VAT at 19.6% of 27,040 euros.

You paid 19,600 which is offset against the 27,040 which means the notaire will retain  7,440 euros as VAT on your "profit"

If your house is not your main residence there might also be a Capital Gains Tax liability as well.