The real estate field, like all other areas, requires some flexibility on merchant goods. Property dealers are professionals who deal with the purchase and resale of real estate. Adjustment at each transaction is a constraint for merchants of goods, who are subject to VAT on the gross margin. They often face difficulties in calculating margin VAT, especially those who launch in this area without much experience. Focus.
VAT on margin
Goods dealers are obliged to regularize the VAT on each transaction. It is also integrated into VAT of miscellaneous expenses. To properly calculate VAT and avoid errors, Excel is the best companion of the merchant of goods and remains a privileged tool thanks to its interesting formulas. For calculation conditions of VAT per transaction, three general classifications are distinguished. These are transactions not subject to VAT, transactions subject to VAT on the margin and transactions subject to VAT on the total. The resale price refers to the VAT price of the resold property, the purchase price corresponds to the purchase price of the property added to the notary’s fees. Agency fees are not part of the margin tax calculation. If you would like more information on the subject, I recommend Jonathan Voogt’s real estate blog.
To be read in addition : Manage your real estate agency
In the event of renovation of a property before resale, the costs of work can be equated with the various expenses of the company and included in the general VAT.
Goods dealers must follow the following calculation method to fulfil their obligations in respect of a transaction: (Margin VAT) = ((Price of resale) – (acquitistion price))/(1 VAT Rate) x VAT Rate.
To find the tax base, the calculation is as follows: Taxable margin = amount paid by the purchaser additional charges — purchase price/ ((100 rate applicable to the transaction)/100).
VAT on total
For the calculation of total VAT, the merchant of goods may deduct the VAT collected from the VAT paid. The amount obtained is part of the company’s general VAT. When the merchant of goods has a positive result, it means that he has made a profit. But complex situations can occur, such as a house sold without VAT and land subject to VAT on the margin. In this case, it is advisable to call on professionals or go to the tax services for better information.
The status of merchant of goods requires a number of obligations and a guide for uninsiders, who carry out the activities of merchant of goods without compliance with regulations. It is up to these merchants to give importance to the new real estate VAT rules which have become applicable since 2010. Goods dealers cannot recover VAT on immovable property that is more than five years old. The act of resale is exempt from taxes and works may be charged at a lower rate. In rare cases, an express option isgranted.