VAT on real estate margin: advice and tax strategy for property dealers

Taxed on the margin when their acquisition did not give the right to deduction: land deliveries for construction and deliveries of completed buildings over five years old in case of opting for taxation. When a real estate dealer carries out a real estate transaction, they are often confronted with the following three questions: Am I exempt from VAT on my real estate transaction? Is my real estate transaction subject to VAT on the margin? Should I apply real estate VAT on the total price? Indeed, real estate transactions conducted by real estate dealers are generally on buildings over 5 years old. Also, depending on the nature of the acquisition, its previous VAT regime, the work carried out, as well as the quality of the buyer, the VAT regime and the VAT strategy to be adopted may vary.

Real estate margin VAT mainly concerns real estate professionals (dealers) who carry out acquisition and sale transactions of land or buildings completed more than 5 years ago. The main issue faced by real estate dealers is the variety of real estate VAT regimes to which they may be subject. Indeed, depending on the nature of the real estate transactions conducted by these professionals, the previous VAT regime, as well as the work carried out, real estate dealers may switch between VAT exemption, VAT on the margin, or VAT on the total price. Also, each of these VAT regimes will have a different financial impact on the transaction and therefore on its final profitability.

In some cases, it is possible to choose your real estate VAT regime. This choice can result either from an option provided by tax legislation or from a strategic choice to be made based on the situation of the parties involved in the transaction by configuring it in advance according to the desired tax outcome: choice of property, project, works, etc.

The VAT on margin applicable to real estate is highly complex. Errors made in VAT on margin by property dealers often lead to numerous tax audits and can have significant financial consequences for businesses.

The tax lawyers at LEXPERTAX assist companies in securing and optimizing the VAT on margin regime. We advise you on the best strategies in real estate VAT to optimize the taxation of your transactions.