Buy Commercial Property with zero Transfer Duty and zero VAT
If you are planning to buy commercial property, take care and you will pay no transfer duty and no VAT.
Firstly, both the buyer and the seller must be VAT registered.
This often means that clients are willing to pay our fee (currently R25 000) for a VAT registered shelf company.
Your company buys, not the building, but the business of building rental including all of the assets necessary for the business to continue as an income earning going concern (including, of course, the building).
The building must be income earning at the time of the purchase (i.e. not be standing empty).
You need a special offer to purchase (in fact it is a special Sale Agreement) drawn up by us or an attorney who is familiar with SARS’ special requirements.
The sale will then be zero VAT rated by SARS and you will pay no Transfer Duty either, because VAT trumps Transfer Duty.
If you get it wrong, you will have to pay the VAT to the seller and claim it back from SARS. We are dealing with one right now. The VAT refund is R11m and SARS required documentation for audit which was submitted on 18 July. Nine weeks later our client is still waiting for his money.