Considering the current property market and the increased number of “forced sales” occurring in situations where financial institutions exercise a power of sale or similar right in relation to a loan in default, Revenue has published Tax Briefing Issue 10 which considers the VAT treatment of the options available to financial institutions in such circumstances.

The Tax Briefing article focuses on two of the more common options available to financial institutions:

1. Apply to the courts for a “Well Charging Order” or an “Order of Possession” – both of these scenarios will be described in this article as the financial institution becoming a “mortgagee in possession” (MIP), or
2. Where the financial institution has a charge on the property, appoint an “asset receiver” over the property.

The article sets out the VAT treatment of MIP/asset receiver selling a property, the special rules for the sale of residential properties by an MIP/asset receiver and the position where an MIP or asset receiver rents a property. The VAT issues arising from property developments are also detailed.

Tax Briefing Issue 10 is available at http://www.revenue.ie