Expansion of reduced VAT rate for demolition and reconstruction: new rules for rental properties.

• New permanent regulation for applying reduced VAT rate for demolition and reconstruction came into effect on January 1, 2024
• Criticized by real estate sector for not retaining reduced VAT rate for sale of homes built after demolition of existing building
• Old regulation in urban areas was significantly tightened, threatening to drive up rental prices in cities
• Government provided expansion for demolition and reconstruction of homes intended for long-term rental
• Reduced 6% VAT rate for demolition and reconstruction also applies to works for building a home for long-term rental
• Conditions include building and demolishing on the same cadastral plot, landlord acting as builder, maximum 200m² living space, renting for 15 years
• Temporary vacancy between rentals is allowed as long as landlord actively seeks new tenant
• Excluded from 6% VAT rate: selling a home for long-term rental, unless planning permission applied for before July 1, 2023
• Sale for long-term social rental can still be subject to 6% VAT if VAT is due in 2024 and rented to social rental agency or recognized housing company

Source: tiberghien.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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