VAT on an 'extension'

[hamlets_shrink]

Hi, I have permission to 'extend' a small run down old shell and the

'extension' in fact will constitute by far the larger living area. In

terms of re-sale is it possible the house will be viewed as a new build

with VAT chargeable accordingly ?

Thanks for your thoughts

[Llwyncelyn]

Hi our friend lives in the Vendee and has just had planning approval to convert what was area attached to the house and with a roof of sorts from existing use of storeage to new build and to 'tie in' with the house.  I thought as the house was 'old' and very much met the 5.5% consideration that would be the charge for TVA.  The devis came back as 19.6%.  Does anything have any thoughts please for it obviously makes quite a difference.

[hamlets_shrink]

Hi Llwyncelyn, we've got our wires crossed slightly, I'm actually

wondering if I as the seller have to ask for TVA on the final sale

price...is that the way it works ? I'm confused. I understand you're

referring to the TVA to be charged on goods and services [by a builder]

during the course of the works, which of course is another important

point.

[BJSLIV]

Where the habitable space has been significantly increased, it is likely that the sale proceeds will be apportioned between old and new. VAT at 19.6% will then be deducted from the increased value of the new property (ie Sale value less cost)  if it is sold within five years of completion. This makes it very important to retain all invoices relating to the extension, as the VAT paid can be offset against any liability.

Any work done in the extension/conversion will be subject to VAT at 19.6% as the lower rate only applies to existing houses. Looking on the bright side it gives you more to offset against any VAT payable!

 

[hamlets_shrink]

Thanks for that BJSLIV that's very authoritative. The old property is

60M2 and the new extension/ house would have 180M2 of habitation. It's

beginning to look like there's not much hope of attempting something in

France from a speculative point of view [now I'm starting to do my

homework] This VAT factor ,which could work out to be quite hefty,

coupled with the CGT rather takes the wind out of ones sails a bit. Has

anyone made a successful go at it ? On the other hand, if we were to

live in the new house as the principle residence, as French tax

residents, how long before CGT exemption is applied ? but then do they

hammer you with a social tax to make up the shortfall ?