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Residential Property VAT

Building an extension to a residential property

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A client recently bought a residential property for himself. For some reason, the property was on two title deeds. The main house on one and a small portion of the garden on the other. My client agreed with the seller to buy the house and then the second portion at a later date when he had the money.

When the agreed date approached to buy the second portion arrived, my client didn't have the money and therefore bought the property through a limited company he is a shareholder in, that had cash. The Ltd co is the registered owner of the property.

The client now has planning permission to put a kitchen extension and garage on this portion of land. It will be joined to the main house.

He wants to know can he reclaim the VAT on the development and then sell the property to himself at the market value at date of transfer. Any VAT advantage of doing this way should, in theory, be nullified by CGT payable by the company on the transfer.

If he did the development in his personal capacity would the extension qualify for a VAT rebate? 

Possibly I should refer him to an expert in this area. Any recommendations?


Replies (3)

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Hallerud at Easter
01st Oct 2018 10:41

I think he is sunk either way as he is not creating an additional dwelling .

Frankly I would get the land out of the company into his own name before building the extension and I see no scope for recovering any vat on the cost of the extension.

Thanks (2)
Replying to DJKL:
By Ruddles
01st Oct 2018 11:01


Thanks (1)
Replying to DJKL:
By Adam12345
01st Oct 2018 11:34

+2 (unless your client likes paying tax)

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