Property LTD VAT question

[ltd101]

Hi, vanilla property rental LTD fully funded through DL account. Sadly the renal revenues are below the £77k per annum that requires me to become VAT-able. Question I have is I think I read somewhere that you can request to become a 'VATable business' even if you are below the threshold. If this is true, why arent all property ltd's registered for VAT because property is not VATable (ie not VAT on rental) but a lot of costs are e.g agent fees, replacement parts etc

Reason this has been drawn to my attention is that I am looking at investing in one of the properties & doing a loft conversion to improve rental yield & this is circ 25-30k so being able to claim back the VAT would be quite a saving.

thoughts appreciated

[AvocadoK]

Are we talking residential property or commercial?
Residential property is generally exempt from VAT so you cannot charge VAT whatever your turnover. Main exception to the rule is holiday lets.

[ltd101]

tks Avocado, this is a residential investment (rental) LTD that simply owns houses & rents them out. I know that my revenues are not VATable because there is no VAT on rental property. What I am interested in is whether I can register for VAT & deduct VAT for any of my costs?

3 examples:

I pay a builder 20k + 4k VAT to build me a loft
My estate agent charges me VAT on their rental fees
If i buy new light bulbs to replace the old ones I have to pay VAT

I am currently under the 77k threshold, but I believe i can register for VAT ? tks

[AvocadoK]

No. You cannot register for VAT if you do not have VATable income.

[ltd101]

Ahh this makes sense to me now. I do have two garages that are currently attached to one of residential properties. If I was to rent these out separately on a commercial contract & charged VAT on this rent would that make any difference? Or am i correct in thinking I would only be able to claim back the VAT on any expenditure specific to the garage(s) in this instance?

[AvocadoK]

If you rent out the garages separately from the dwellings (i.e. not to the same tenant), it is standard rated, so you could voluntarily register for VAT, and charge VAT on the garage rents. You could recover the VAT directly attributable to the garages and a proportion of general overheads. The question that arises is whether your tenants are happy to pay rent plus VAT.