Customs excise developers' options

Article Abstract:

Proposed changes to UK law regarding VAT charges on property disposals could prove costly for commercial property devlopers. The changes, proposed in the 1996 Budget, prevent landlords or vendors charging VAT on the rent or sale of properties where the tenant or purchaser is going the use the property for purposes which will not incur VAT charges. The proposed legislation is aimed at preventing VAT avoidance by insurance and banking organisations but property companies and investors will lose out because they will not be able to exercise their option to recover VAT on construction and development costs.

Commercial buildings

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Budget balance

Article Abstract:

Reform of the corporate tax regulations will have different consequences for pension funds that wholly own property and those which hold shares in property investment companies. The Labour Government introduced changes to the corporate taxation policy in the 1997 budget. Pension funds which own property may receive the rental income in full, but the abolition of the ability to reclaim tax on dividends will result in those who invest in property companies receiving only the dividend. The changes to the tax system is likely to make direct investment in property more popular.

United Kingdom, Interpretation and construction, Investment companies, Tax reform, Pension funds, Tax policy

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The hidden trap

Article Abstract:

Investment property sellers should be aware that their purchasers should actively manage the property as an investment and not resell it quickly, or the seller will be required to pay value added tax (VAT) on the deal. The contract must specify that the property is being sold without VAT and that a claim for a transfer of going concern (TOGC) has been obtained. The seller would then have the right to pursue the purchaser for VAT if it was necessary. A TOGC relief is awarded if the purchaser continues the business for over three months.

Tax Deductions & Exemptions, Property Taxes, Real estate investment, Real estate investments, Tax deductions, Property acquisition

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