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I was caught really flat footed recently when, in a meeting, I was asked whether the client, who buys and sells residential property and is VAT registered, must charge VAT on each sale.

I knew the answer was “No”, but an alarm bell rang in the back of my head, because I had accepted that as common knowledge and had never gone to source, the VAT Act, to confirm it.

I promised to go to source and report back.

Well, I had to report back that nowhere in the Act, does it state in simple terms that the trade of residential property is not a VATable supply.

Sure, there’s plenty of legal opinion on the internet that states this quite clearly, but I have a policy never to believe what an “expert” says, rather read the relevant Act.

Essentially what the Act does say is that if fixed property is used in the furtherance of a business (commercial property, guest house, certain student accommodation) then its sale attracts VAT, otherwise not. But it’s a little bit here, a little bit there and never clearly stated. I found VAT 409, SARS’s Guide for Fixed Property and Construction for Vendors that does state it clearly. I think its worth quoting –

Developers are different. They charge VAT so can, and do, advertise “No Transfer Duty”.


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