Andrew Needham looks at the VAT consequences of taking a property into private use.
It is not uncommon for a business to construct a residential property and then, some way through the project, decide to change its use from business and divert it to private use. In other words, at some point in the project, the business owner thinks the house looks so nice they want to live in it themself!
Types of development
There are different situations where this could happen and each has a different VAT consequence. Examples include:
- building a new residential property;
- renovating an existing residential property; or
-
converting a commercial property into residential use.
The VAT consequences can also vary with the legal entity undertaking the development, for example, a sole proprietor,
