IMPLICATIONS OF VAT INCREASE ON PROPERTY SALES
If you are currently negotiating a deed of sale to purchase immovable property or if a sale has already been concluded in writing and is still in the process, questions may arise as to the VAT rate that will apply to the transaction.
In the following instances the 14% VAT rate will continue to apply to the sale of residential property including units in sectional title schemes and share block schemes, and plot and plan and free hold dwellings:
- where the 14% VAT rate applied to the sale before 1 April 2018,
- where the purchase price was determined and stated in the written agreement;
- if the written agreement was signed by the parties before 1 April 2018;
- where payment and registration takes place after 1 April 2018;
A VAT rate of 15% will apply to the sale of commercial property concluded before 1 April 2018 and registering after 1 April 2018.
If you have concluded a sale agreement before 1 April 2018 it is advisable to review the sales agreement and to obtain expert tax advice to ensure that provision is made for the increased VAT rate, if applicable, and appropriate mechanisms are in place.
Contact Goldberg & de Villiers Inc on 041 – 501 9800 if you require advice on your property related matters.
