Hi, I have a sole trader who is registered for VAT (an art shop). They have also decided to rent out two flats. Before they rented them out, they refurbished the flats costing over £5000 and they have reclaimed the VAT on these invoices.
I would point you towards the "partial exemption" rules and the "option to tax rules".
HMRC website will cover both in detail in the first instance and I'm sure others will expand below, but I'm just off to work now so hopefully the above will give you a head start.
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Forgive the typo's I generally do not proof read. Just lazy I guess!