EASIGUIDE TO PAYMENT OF VAT AND TRANSFER DUTY
Category Useful Info
THE FOUR GOLDEN RULES:
- VAT is payable on the sale of commercial property, not residential property (unless the residential property is used for commercial purposes such as a guest house).
- VAT and transfer duty can never be paid on the same transaction, it is either the one or the other.
- Where a commercial property is sold with leases in place. it is regarded as the sale of an enterprise as a going concern, no transfer duty is payable, and VAT is calculated at ZERO percent, in other words, there is no VAT payable on the transaction.
- The purchaser must be registered for VAT at the time of the transfer of the property – there is no need for the purchaser to be registered at the date of sale.
RESIDENTIAL SALE OF PROPERTY
Transfer duty is paid, and no VAT is payable.
COMMERCIAL SALE OF PROPERTY
VAT VENDOR TO VAT VENDOR
Seller liable for VAT and purchaser pays VAT as part of the purchase price but can claim VAT back.
VAT VENDOR TO NON-VAT VENDOR
Seller liable for VAT and the purchaser pays VAT as part of the purchase price but cannot claim VAT back. No transfer duty is payable.
VAT VENDOR TO VAT VENDOR (sale as going concern)
Leases with tenants remain in place with new owner stepping into the shoes of the old owner – VAT is calculated at zero percent and VAT at zero percent is paid.
WHERE TRANSFER DUTY PAYABLE IT IS CALCULATED ON THE PURCHASE PRICE OR VALUE OF THE PROPERTY:
R0 - R900 000: 0 %
R900 000 - R1 250 000: 3 %
R 1 250 000 - R1 750 000: 6%
R1 750 000 - R2 250 000: 8%
R2 250 000 - R10 000 000: 11%
R10 000 000 and above: 13%
Author: AMC Hunter Attorneys