VAT on Property

VAT on Property in Ireland: A Complete Guide for 2026

VAT (Value-Added Tax) on property in Ireland is complex and can significantly impact the cost of buying, selling, or letting property. Different VAT rates and exemptions apply depending on the type of property, its age, whether it has been developed, and how it is used.

This comprehensive guide explains VAT on property in Ireland for 2026 in clear, practical terms. It covers VAT on property sales, lettings, the option to tax, Capital Goods Scheme (CGS) adjustments, filing obligations, and recent legislative changes, including the reduced 9% VAT rate on completed apartments.

This guide is designed for property owners, developers, landlords, investors, and SMEs who want clarity, compliance, and confidence when dealing with Irish property VAT.

Table of Contents

1. Introduction to VAT on Property in Ireland
2. VAT on Property Sales in Ireland
3. VAT on Property Lettings in Ireland
4. Option to Tax on Property
5. Capital Goods Scheme (CGS) Adjustments
6. Reduced 9% VAT Rate for Completed Apartments
7. VAT Filing and Payment Dates
8. VAT Summary Tables
9. Common VAT Mistakes and Compliance Tips
10. Frequently Asked Questions (FAQs)
11. Summary and Key Takeaways
12. Disclaimer

Introduction to VAT on Property in Ireland

VAT applies to many property transactions in Ireland, but the rules are very different from everyday VAT on goods and services. Whether VAT applies depends on several key factors:

• Is the property new or old?
• Is it residential, commercial, or holiday accommodation?
• Has the property been developed or refurbished?
• Is the transaction a sale or a letting?
• Has the landlord opted to tax?

Understanding these rules early can help avoid unexpected VAT costs, penalties, or Revenue audits. This guide reflects current Revenue practice and legislation, including the reduced 9% VAT rate for apartments effective from 8 October 2025.

VAT on Property Sales in Ireland

VAT on New Property

New property sales are generally subject to VAT at 13.5%.

VAT applies in the following situations:

• First sale within five years of completion
• Second sale within five years where:
  • The property has not been occupied for at least 24 months, or
  • The first sale was between connected parties

Client-friendly example:
If a developer sells a newly built apartment and it is resold within five years without being lived in for two years, VAT at 13.5% will usually apply again.

VAT on Old Property (No Development)

An old property is one that has not undergone significant development.

• Sales more than five years after completion are generally VAT exempt
• Sales within five years may still be VAT exempt where:
  • The property was occupied for at least 24 months, and
  • There was a prior sale between unconnected parties on which VAT was charged

VAT on Old Property (Further Development)

If development has taken place:

• Minor development
  • Less than 25% of the sale value → VAT exempt
• Major development
  • 25% or more, or a change in use → VAT at 13.5%

Residential Property Sold by Developers

• The sale of a new residential property by a developer or connected party is subject to 13.5% VAT
• Older residential properties may be VAT exempt depending on facts

Property Not Developed in the Past 20 Years

• Generally VAT exempt
• Encourages resale of long-standing properties

VAT on Property Lettings in Ireland

Residential Lettings

• VAT exempt
• Cannot opt to tax

Commercial Lettings

• VAT exempt by default
• Landlords may opt to tax, charging 23% VAT
• Allows recovery of VAT on purchase or development

Holiday Lettings

• Generally subject to 13.5% VAT
• Applies where letting does not exceed eight consecutive weeks
• No option to tax required

Option to Tax on Property

The option to tax allows VAT to be charged on otherwise exempt commercial property.

Key requirements:

• Must be explicitly documented
• Lease must clearly allow VAT to be charged
• A generic VAT clause is not sufficient

This is a critical area where professional advice is strongly recommended.

Capital Goods Scheme (CGS) Adjustments

CGS applies where VAT has been reclaimed on property.

• Applies over a 20-year period
• Adjustments arise where use changes (taxable ↔ exempt)
• Can result in a VAT clawback

Example:
A VATable office building later converted to residential use may trigger a CGS repayment.

Reduced 9% VAT Rate for Completed Apartments

From 8 October 2025 to 31 December 2030, a 9% VAT rate applies to qualifying apartment sales.

Conditions:

• Residential use
• Multi-storey building with 3+ apartments
• Common or grouped access

Important:
This rate applies to sales only, not construction costs.

VAT Filing and Payment Dates

VAT Summary Tables (Highly Recommended for Readers)

VAT Rates by Property Type

Common VAT Mistakes and Compliance Tips

• Assuming all property sales are VAT exempt
• Opting to tax incorrectly
• Ignoring CGS exposure
• Poor documentation of occupancy or prior sales
• Misapplying the 9% apartment VAT rate

Practical tip:
VAT advice before signing contracts can prevent costly mistakes later.

Frequently Asked Questions (FAQs)

Is VAT always payable on property sales in Ireland?

No. Many property sales are VAT exempt, particularly older properties.

Can I charge VAT on residential rent?

No. Residential lettings are always VAT exempt.

What is the option to tax?

A choice to charge VAT on commercial rent to recover VAT on costs.

What is the CGS?

A 20-year VAT adjustment mechanism for property.

Who qualifies for the 9% apartment VAT rate?

Sales of qualifying apartments between 8 October 2025 and 31 December 2030.

Summary and Key Takeaways

• VAT on property in Ireland is highly fact-specific
• New properties usually attract 13.5% VAT
• Many old properties are VAT exempt
• Residential lettings are always exempt
• Commercial landlords may opt to tax at 23%
• CGS can create long-term VAT exposure
• The 9% apartment VAT rate offers a major opportunity

Understanding these rules helps property owners and investors remain compliant and avoid unexpected VAT costs.

12. Disclaimer

This article is for general information only and does not constitute tax, legal, or accounting advice. VAT rules may change, and individual circumstances differ. Professional advice should always be obtained before acting on the information above. No liability is accepted for reliance on this content.