I’ve been worrying this bone since 2018. I have published all the right answers both in my articles and in my books, but I focused more on the rental of the accommodation rather than on the rental of the building. So here goes. We assume that your turnover exceeds R1m.

If you rent a residential accommodation building directly to a tenant or tenants without services, you are renting residential accommodation and it is exempt from VAT.

Example1. Your own a house and rent it out on a 1-year lease.

Example 2. You own a student accommodation building and let it out to students but do not provide any services.

If you rent a residential accommodation building to a company or person who in turn rents it to tenants, then your contract is not for the rental of residential accommodation but of a building. It is a commercial rental and is subject to VAT at 15%.

Example 1. You rent a student accommodation building to a University or company and the University or company rents it out to students.

Example 2. You rent a residential property to a company, which runs it as a Guest House.

If you rent accommodation to a tenant or tenants with services, you are running a commercial venture, and it is subject to VAT either at 15% or 9% depending upon the length of the stay.

Example 1. You own a guest house, frail care centre or the like.

Example 2. You run an AirBnB business.