VAT on property and construction
Updated: July 2026
Property is where Irish VAT gets genuinely complicated, and it is the area where a rate mistake costs the most because the sums are large. Four rules cover most day-to-day questions, and every figure below can be reproduced on the Irish VAT calculator at the 13.5% rate.
Construction services: 13.5%
Building, renovation and most trades work on property carry the reduced rate. A €40,000 extension quote means €5,400 of VAT and a €45,400 gross bill. The rate covers the service; building materials bought over the counter are generally 23%, which is why supply-and-fit arrangements are usually cheaper on VAT than buying materials yourself, subject to the two-thirds rule on the value of materials within the job.
New apartments: a reduced rate to 2030
Budget 2026 cut the rate on sales of completed apartments to 9%, in place from 8 October 2025 to 31 December 2030, as a supply-side housing measure. Sales of new houses generally remain at 13.5%. Second-hand residential property between private parties is normally outside the VAT net entirely; stamp duty, not VAT, is the tax on those deals.
Subcontractors and the RCT reverse charge
Where a subcontractor works for a principal contractor under Relevant Contracts Tax, the VAT reverse charge applies: the subcontractor invoices without VAT and the principal accounts for it on their own VAT3, as output and input on the same return. The subcontractor's invoice must state that the reverse charge applies. Getting this wrong in either direction, charging VAT that should not be charged or failing to self-account, is one of Revenue's most common construction audit findings.
Landlords and the option to tax
Letting property is exempt by default, which sounds pleasant until you realise exemption blocks recovery of VAT on the purchase or refurbishment. Commercial landlords can therefore exercise an option to tax a letting, charging 23% on the rent and preserving their input deductions. The option is made letting by letting and has knock-on effects for the tenant, so it belongs in the lease negotiation, not as an afterthought. Residential lettings cannot be opted; they stay exempt.
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Common questions
What VAT rate applies to building work in Ireland?
Construction services carry the 13.5% reduced rate, subject to the two-thirds rule on materials. Materials bought separately are generally at 23%. Sales of completed apartments carry a reduced rate from 8 October 2025 to 31 December 2030 under Budget 2026.
What is the reverse charge in construction?
Where a subcontractor supplies construction services to a principal contractor under RCT, the subcontractor invoices without VAT and the principal accounts for the VAT on their own return as both output and input. The invoice must state that the reverse charge applies.
Do landlords charge VAT on rent in Ireland?
Lettings are exempt by default. Commercial landlords can opt to tax a letting at 23% to preserve their right to reclaim VAT on acquisition and development costs. Residential lettings cannot be opted and remain exempt.