For homes owned as of 4 July 2006 by real estate companies and for those completed at least four years before that date, the sale of which will take place with VAT exemption, the adjustment of the deduction is not triggered. In this way the legislator, in the conversion provision of Legislative Decree 223/06 (or at least in the current version), grants the legitimate expectation required by leasing and real estate companies. For instrumental buildings, the option for VAT, both for rental and for sale, allows the owner companies to maintain VAT taxation in full, with the right to deduct the input tax paid. However, a 1% registration tax is required for rentals, including financial ones, and a 4% hypo-cadastral tax, to be paid upon sale or redemption. For real estate leasing contracts it will be possible to deduct the 1% registration tax, paid during the contract, from the mortgage and cadastral taxes due upon redemption. Housing According to the amendment approved by the Senate Budget Committee, for residential buildings owned on 4 July 2006 it is necessary to distinguish two hypotheses, one for companies that have not built the property and the other for those that have built it. For companies that have not built or restored residential buildings (resale real estate or other companies of any type), the adjustment of the deduction provided for in article 19-bis 2 is never applied, regardless of the year of purchase of the building. Therefore, neither the adjustment due for the change of regime, with the entry into force of the new provisions (19-bis 2 paragraph 3), nor that for change of destination, when for the first time, after the 4 July, the homes will be rented or sold with VAT exemption (19-bis2, paragraph 2). For the companies that built the homes and those that carried out or had carried out restoration work, a double track opens up. If the construction or intervention was completed before 4 July 2002 (4 years before the decree came into force), companies do not adjust the deduction, either due to a change in regime or destination. If, however, the works end after 4 July 2002, the construction or restoration companies apply the adjustment of the deduction at the time of the first use of the lease or transfer, due to a change of destination (article 19-bis2, paragraph 3). Operational buildings At the end of the fourth year from the completion of the construction, no adjustment is necessary, as the building, through an option, can generate taxable operations. Similarly, no adjustment of the VAT deduction must be made for the instrumental buildings of which one is the owner on 4 July 2006, if in the first deed of sale or rental of the property, stipulated after the entry into force of the law converting the decree, the option for the imposition of VAT on the rental or sale of the property is exercised. Current and future leases For rental contracts in progress on the date of entry into force of the decree, the parties must present the registration of a declaration, where the option for VAT can be exercised, with effect from 4 July 2006. With a provision of the Director of Revenue, to be issued by 15 September 2006, the methods and terms of obligations and payment will be established. If, however, the building is rented or sold without exercising the option for taxability (a rather remote hypothesis), the adjustment of the deduction will be triggered at that moment (article 19-bis2) according to the ordinary criteria.
source: House 24
Grimaldi Padua
Padua - 35137 - Via G. Matteotti, 27
e-mail: padovacentro@grimaldifranchising.it
Tel. +39 49 663 033 - VAT number 05301660287
Grimaldi Cadoneghe
Cadoneghe (PD) - 35010 - Via G. Franco, 2/A
e-mail: cadoneghe@grimaldifranchising.it
tel. +39 049 88 736 56 - VAT number 05322440289