Opting to Tax Commercial Property: A Guide to VAT Basics

• Opting to tax commercial property allows a supplier to choose to add VAT to a supply
• An option to tax (OTT) turns an exempt supply into a taxable supply at the standard rate for commercial property
• The purpose of OTT is to recover or avoid input tax incurred in relation to the property
• The OTT is usually irrevocable for a 20-year period
• Important questions to consider before a property transaction include VAT on purchase price, existing lease, Capital Goods Scheme, refurbishment plans, and input tax recovery
• Input tax relating to an exempt supply is usually irrecoverable, so taking an OTT allows for recovery of input tax
• The OTT process involves a decision by the business to opt, followed by adding VAT to the sale price or rent

Source: deeksvat.co.uk

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.

---

---