I'm a real estate developer — is there a tax difference between selling residential and commercial units?

The first supply of a residential unit (the initial sale or lease within three years of completion) is zero-rated, which lets the developer recover input VAT on construction costs even though the final invoice to the customer carries no VAT charge. Reselling that same unit afterward is fully exempt instead. Commercial units — offices, retail, hotels, warehouses — are standard-rated at 5% in every case, whether sold off-plan or on the secondary market, with no first-supply exception. Bare land is generally exempt, unless it's brought into an actual development project.

A developer selling both residential and commercial stock needs to apportion the input VAT that serves both, since part of the spend relates to an exempt supply and isn't fully recoverable. On Corporate Tax, transitional rules exist for gains on property owned before the regime began, allowing part of the pre-regime profit to be excluded through an approved valuation — a technical area that needs case-by-case review. RASEEKH sets up the input-VAT apportionment and applies the transitional treatment correctly from day one.