VAT on stage payments this year: difference to pay later?

Viewing 4 reply threads
  • Author
    Posts
    • December 7, 2012 at 12:30 pm #57168
      Anonymous
      Participant

      We all know that VAT (IVA) on new homes, and stage payments for new homes under construction, was reduced to a special rate of 4pc this year, and that it is due to go up to the normal rate of 10pc from Jan 1 2013 (unless this unpredictable Government surprises us with a prorogation next year).

      I have been asked if stage payments this year at 4pc at VAT, will attract a bill for the difference in future. In other words, do you have to pay the full VAT of 10pc of the property value at the end, meaning an extra bill of 6pc VAT to cover all stage payments this year.

      As I understand it you pay IVA at the rate of the moment. So stage payments this year at 4pc, next year at 10pc. Payments made this year are not recalculatet at 10pc with the difference to pay. But I could be wrong.

      If I’m right, then it make sense to pay as much as possible this year if you are buying under construction, and save yourself 6pc VAT. Incredible as it may sound, I do know of quite a few people in this situation.

      Anyone know the answer for sure?

    • December 7, 2012 at 12:42 pm #113761
      Anonymous
      Participant

      I agree with you Mark. The question arises that why would you pay more than you have to. The building may not be completed.The builder may go into liquidation, first licence may not get issued, the builder will have no motivation to complete, use inferior quality materials. Sadly all this is due to overtly dishonest way the Spanish developers have operated for as long as I can remember.

    • December 7, 2012 at 12:51 pm #113762
      katy
      Blocked

      Is there anyone crazy enough to be buying a half built property right now 😯

    • December 7, 2012 at 2:06 pm #113764
      Fuengi (Andrew)
      Participant

      hi Mark,

      that is my undestanding aswell. As all stage payments made to a developer are meant to include the relevant IVA, then until the end of the year it is 4%.

      But I think most would be thinking along the lines of what Katy has posted….

    • December 7, 2012 at 9:04 pm #113771
      Anonymous
      Participant

      Katy, these are probably people who started paying stage payments years and years ago…. it’s just so slow and the builders becoming backrupt that it’s taking so long??

      otherwise I agree, who in their right mind is buying an off plan place now. Building their own place I can understand, but anything else is asking for trouble?

  • Author
    Posts
Viewing 4 reply threads
  • The forum ‘Property Questions & Answers’ is closed to new topics and replies.