Is VAT on a residential property really different from a commercial one?

New residential property has two different treatments depending on timing: the first sale or a long-term lease within three years of the building's completion is zero-rated (0%), which lets the developer recover input VAT on construction in full. Any supply after that — a resale, or an ordinary residential lease in the secondary market — is fully exempt, with no recovery of related input VAT at all. Short-term rentals and serviced apartments, though, stay standard-rated at 5% because they're treated as a hospitality service rather than long-term residential accommodation.

Commercial property works differently altogether: a sale or lease is always standard-rated at 5%, with no exceptions tied to the building's age or timing, and related input VAT is fully recoverable. The practical difference that matters most is for a developer or investor holding a mix of residential and commercial units — input VAT has to be apportioned accurately by the nature of each unit, or it turns into a recovery dispute at audit time. RASEEKH helps property owners and developers get that apportionment right before it becomes a surprise on the return.