Andrew Needham looks at some potential pitfalls of selling a property to a housing association.
The sale of a commercial property is normally exempt from VAT, but the vendor has the option to tax it – in other words, they can decide to charge VAT on the sale so that they can recover the VAT on costs associated with it.
In many cases, property owners opt to tax a property when they buy it in order to recover the VAT on the purchase and on any renovations that are required before renting it out (plus VAT). An option to tax can be made on a commercial property or bare land, but not on residential property.
Selling to a housing association?
If a business has opted to tax land or commercial property and it intends selling it to a housing association, it could be in for a nasty surprise.
A housing association can disapply an option to
