Can I buy property from a developer with no VAT and no Transfer Duty?
The sale of property always attracts VAT or Transfer Duty but never both. Under special circumstances, the sale can be zero rated. This is when you buy a commercial property renting business as a going concern.
Developers are invariably VAT registered, so the VAT that they charge you replaces Transfer Duty.
They often advertise this as “No Transfer Duty” and then bury the VAT in their selling price, so you don’t see it.
In the above example the Transfer Duty (after taking the VAT out of the price) would have been R44 963, but the VAT in the selling price is R2 224 000 / 115 x 15 = R290 086. Not as good a deal as you thought!
What if each property is owned by a separate company and the developer offers you the shares in the company?
If the land is zoned “Residential”, then the company is a Residential Property Company and the shares are deemed to be property in terms of the Transfer Duties Act, so Transfer Duty is payable on the selling price of the shares.
If you are buying the property as an investment, then you need to chat to me before signing the deal. You can access my diary and book free meetings here .