Residential vs Commercial Property VAT
VAT treatment differs significantly between residential and commercial property rentals in Ireland.
Residential Rentals
VAT Exempt
- • Long-term residential lettings exempt from VAT
- • No VAT charged on rent
- • Cannot reclaim VAT on property expenses
- • No VAT registration required for residential only
Tax Treatment
- • Income tax on rental profits
- • PRSI and USC apply
- • LPT responsibility
- • RTB registration required
Commercial Rentals
VAT Applicable
- • Option to charge 23% VAT on rent
- • Landlord and tenant must opt for VAT
- • Can reclaim VAT on property expenses
- • VAT registration required if opted
Benefits of VAT Option
- • Recover VAT on purchase/development
- • Reclaim VAT on repairs/maintenance
- • Better for VAT-registered tenants
- • Avoid VAT clawback on new properties
Short-Term Rentals & Airbnb VAT
Special VAT rules apply to holiday homes and short-term accommodation.
VAT Treatment
Subject to VAT
- • Short-term lets are accommodation services
- • 9% VAT rate applies (hospitality rate)
- • Must register if exceeding €42,500
- • Includes Airbnb, Booking.com, VRBO
Threshold Monitoring
Track all short-term rental income across all platforms to monitor VAT threshold
Compliance Requirements
Registration & Returns
- • Register for VAT within 30 days
- • Charge 9% VAT on accommodation
- • File bi-monthly VAT returns
- • Issue VAT receipts to guests
Input VAT Recovery
Can reclaim VAT on property expenses, utilities, cleaning, maintenance once registered
VAT on Property Development & Sales
Complex VAT rules apply to property development, sales, and transitions.
New Properties
13.5% VAT applies to:
- • New residential properties
- • Completed within 5 years
- • First supply only
Subsequent sales exempt unless substantially developed
Commercial Properties
23% VAT on:
- • New commercial buildings
- • Substantially developed properties
- • Option to tax older properties
Capital Goods Scheme may apply for adjustment
Transitional Properties
Two-Third Rule:
- • Residential to commercial conversion
- • Mixed-use developments
- • Change of use planning
VAT clawback may apply on change of use
Landlord VAT Compliance Checklist
Essential VAT considerations for Irish property landlords.
Decision Points
Should I Register for VAT?
- ✓Commercial property - usually yes
- ✓Short-term lets over €42,500 - mandatory
- ✓Residential only - generally no
- ✓Mixed portfolio - consider carefully
VAT Recovery Opportunities
- ✓Development and construction costs
- ✓Professional fees (legal, estate agents)
- ✓Repairs and maintenance
- ✓Property management services
Ongoing Obligations
Monitor Thresholds
Track rental income to identify VAT registration triggers
Maintain Records
Keep all invoices, receipts, and rental agreements for 6 years
File Returns
Submit bi-monthly VAT returns if registered, even for nil amounts
Review Portfolio
Annual review of VAT position as portfolio changes
Simplify Property Rental VAT Compliance
PayVat handles complex property VAT rules automatically. From residential exemptions to commercial options and short-term rental compliance.
Join 1,500+ Irish landlords using PayVat for rental compliance