VAT on property rentals: what actually applies to owners?

Many owners hear about VAT and assume it applies to every rent they collect. The reality is more nuanced: tax treatment depends on the property type and its use, and knowing the difference saves you from wrong calculations and unnecessary claims.

Residential rent: usually exempt

Leasing residential property to individuals for living purposes is exempt from VAT. As the owner of a residential apartment rented to a tenant who lives in it, you do not add tax to the rent, nor issue a 15% tax invoice.

Commercial rent: taxable

Leasing shops, offices, warehouses, and commercial units is subject to VAT at the applicable rate. Here you must issue a correct tax invoice, collect the tax from the tenant, and report it in your returns.

The practical rule: look at how the unit is used, not at who the owner is — that determines the tax treatment.

How organization helps

When your units are classified residential vs. commercial from the start, tax calculation becomes clear, and tax invoices stay linked to each contract. In OMARA, tax is computed at the moment of the transaction and stored, so it is never recalculated later and errors do not slip in.

This article is for general guidance only and is not a substitute for consulting a tax specialist when needed.