Real Estate
VAT Input on Construction Costs
Recording recoverable VAT paid on contractor invoices during the construction phase.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Construction in Progress (CIP) | Asset (+) | 1,000,000.00 | - |
| VAT Input Tax (16%) | Asset (+) | 160,000.00 | - |
| Accounts Payable (Contractor) | Liability (+) | - | 1,160,000.00 |
💡 Accountant's Note
VAT paid to contractors is a recoverable input tax, not part of the building cost. It is claimed back against the VAT charged on unit sales. Separating it from CIP is essential for correct tax filing.
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