VAT on renovated property

[DrAlanStatham]

Hi,

I’ve had a look at some of the discussions here on the subject and can’t quite find the answer I’m looking for. I’d appreciate some views on the deduction of VAT from sale proceeds on the sale of renovated property.

My situation is:

·         I bought a property in 2000 with my father for renovation. It had previously been used as a home but had been vacated and the farmer was using it to keep pigs in.

·         Although we haven’t changed any of the perimeter walls, the slate on the roof has been replaced and pretty much all of the interior (excluding the joists) has been newly installed.

·         We finished the bulk of the renovation work in 2003 (the kitchen was fitted in December 2002) and I lived there from June 2005 to December 2007.

·         Shortly after moving in, I wrote to the tax authorities to let them know I was living there and have paid ‘tax d’habitation’ since July 2005. In the letter, I mentioned that the property became ‘habitable’ in September 2004.

Although I haven’t seen the definition, it seems likely to me that on sale, the proceeds will be subject to the deduction of TVA at 19.6%. Having done a great deal of the work ourselves, there’s not a great deal of input TVA to deduct, which wipes out a fair chunk of the profit.

I’m aware that like new builds, if you wait five years, the TVA issue disappears. My question is, at what point does the five year time-span start to be measured? Unlike new-builds, there’s no certificate of completion to take as the starting point, so can I take the fitting of the kitchen? Or are the tax authorities likely to refer back to my letter that says it was ‘habitable’ from September 2004? Or worse still, from the point in time at which I first started paying tax d’habitation?

Also, is there anything set out in the legislation that clearly states when a renovated property becomes subject to TVA on disposal?

Thanks in advance for any help.

DAS

[Sunday Driver]

Here's a starter for ten on the legislation concerning TVA on renovated property:

http://vosdroits.service-public.fr/particuliers/F2407.xhtml

Note that the property becomes categorised as 'new' (and therefore subject to TVA on sale) once one of the four qualifying renovation components is completed.  The problem may be in providing evidence of when these completions occured if you have no artisan invoices, otherwise I suspect they may take the date when you informed them the house was habitable in September 2004 (the tax d'habitation wasn't due on 1 January 2005 because you weren't actually living there on that date).