Option to tax ― real estate election (REE)

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Option to tax ― real estate election (REE)
  • What is a real estate election?
  • What is not covered by a real estate election?
  • What is the interaction between the real estate election and pre-existing options to tax?
  • How is a real estate election made and notified?
  • Practical points ― real estate elections

Option to tax ― real estate election (REE)

This guidance note looks at real estate elections.

For an overview of the option to tax more broadly, see the Option to tax ― overview guidance note.

For in-depth commentary on the legislation around the real estate election, see De Voil Indirect Tax Service V4.115C.

What is a real estate election?

An REE is a formal decision made by a business that (with certain exceptions) it will be treated as having opted to tax every property in which it (or a member of its VAT group) subsequently acquires an interest.

An REE differs from what is known as a ‘global option to tax’. A global option applies to a large number of properties that are not specifically identified (for example ‘all current property holdings and future acquisitions’). A global option has a significant downside being that it cannot be revoked on a property-by-property basis. This is different to an REE where individual options can be revoked, subject to meeting the normal conditions for revocation. Although some global options still exist, it is no longer possible to opt to tax all current holdings and future acquisitions in this way. Theoretically, a business could still opt to tax a large area (eg the whole of the UK) but this is unlikely to be desirable given it is considerably less flexible than an REE. If a global option is already in place, it may be possible (and desirable) to convert this into an REE.

Where a business wants to

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