VAT for Residential Units
A residential building is a building or part thereof that is intended and designed for occupation by individuals and mainly includes building that can be occupied by any person as the main place of residence.
The first supply of new residential buildings within the first three years of it being constructed shall be zero-rated. All subsequent shall be exempt, even if within the first three years.
What is a Supply of real estate? A real estate supply can be either sale or lease of any real estate property.
The vat Purpose Residential building does not include:
- Any building that is fixed at ground level and can be moved to another place.
- Any building that is used as hotel, motel, and bed and breakfast establishment or hospital rooms.
- Serviced apartment for which services in addition to the supply of accommodation provided.
- Building constructed or converted without lawful authority.
What is a commercial building for VAT purposes?
A Commercial building is any part thereof that is not a residential building.
Examples would be warehouses, hotels, shops etc.
Does Real Estate Owner have to register for VAT?
They do not have to register for VAT if they do not have any other business units other than the residential property.
Treatment for Combined use of both Residential & Commercial buildings.
The rent or sale of a residential unit in the same building where commercial part also occupied shall be zero-rated.
The rent or sale of commercial part of the building shall be treated as subject to VAT at 5%.